How do you start a business?

Ok, another question:

Do we need to incorporate before we purchase domain names if we want to write them off?

Take your cost estimate and double it.

Take your estimated timeline to get running and triple it.

I have started five businesses. Just sold the last and started two more. My advice is to learn to run a business. The rest will fall into place. Know your costs to the penny, and sell a value arguement rather than a cost arguement. Much easier to sell eight widgets for 10 each dollars than 10 for 8 each. But most startups try to grab customers and market share by being cheap. The better way is know your costs, add your time as a cost (don't work even an hour a week for free),add a comfortable profit (not included in your time) and determine the selling price. Don't worry about what the competition charges unless they are far below your numbers. If they are your numbers are wrong (unlikely) or the business is not viable (likely) Then you sell yourself not the product. People buy relationships not products.

In reply to mtn:

Nope. It's nice to keep it in the same year though.

Creating an LLC is like $600 in IL, it will be one of the costs you use to write off against your first year.

mtn wrote: the business would be, in short, dietetic and nutritional services.

APEowner wrote: you should at least investigate what professional liability is going to cost and cover and talk to an attorney about the best way to structure your business to minimize personal liability in her field.

Since the work is essentially in the the Health Care industry this is an important point and probably the first thing you should check.

having done this. Things you MUST have.

A CPA. They do your taxes. Both personal and the company. They are there to help you set it up so you don't make mistakes and can help you plan ahead for tax time. Like should you own your vehicle or should the company. There are a lot of things to consider with just this one thing and there are dozens of decisions just like this that WILL have an impact on your buisness and taxs as well as insurance.

A Lawer. Yes I know but they are there to look out for you. Have them review the incorporation papers. There are reasons why you may want to be a LLC but there are also reasons why an S Corp may be a better option and there are tax reasons for them as well that need to be looked at. A lawer can advise you on this in conjunction with your CPA.

A Insurance Agent that has experience with corporate insurance. This is very important as they should be looking out for both you personally as well as protecting your company. You will be calling them more than you think. You will also find that there will be limitations to coverage and knowing this can keep you out of troubble. If the insurance will not cover an activity it is a good bet that it is something you don't want any part of.

If you don't have good computer skills find a good IT person. I have found that most of the time it saves you money to pay someone to fix something in half an hour than you spending half a day sorting it out.

An understanding spouse. I can not even begin to try and explain how important this is. If you own a buisness you are the buisness and you are always on call. The buck stops at your desk. Deadlines and missed dinner dates happen. If you can not accept this stop and walk away now and stick with the 9-5.

Payroll. Get it done by a third party. They do all the taxs and more importantly pay them for you. They provide all the needed reports to your CPA at tax time. Just do it and accept the cost. It is money well spent.

Start up costs. What ever you think it is double it. The Nickles and dime stuff is where the money will go. Buisness cards reams of paper ink cartridges accounting software. The little things add up quick and no on misses twenty here and there but the next thing you know you have spent $1,000.

Keep paper copy's of all payments received and all made.

I have lots more stuff but this will get you started

Lastly take it seriously. If you treat it like a part time job clients will soon realize they are part time clients. I run my buisness like my life depends on it and that is because it does.

Let me preface this by saying I'm not a CPA, and if you want accounting advice you NEED to talk to someone who is.

AIUI, the tax rules depend a lot on what kind of business it is. "Sole proprietorship" vs incorporating (and I think there are different types of corporations as well). IIRC, the former gets done on your own tax form, whereas the latter files its own separate tax forms. I think the "hobby" vs "business" thing really comes down to the question of deducting against your non-business income -- for a hobby you can only deduct hobby expenses against the hobby income (once you zero it out you can't go further), whereas for a business you can deduct beyond that, against your W2 or other types of income. You can see why the latter is ripe for gaming the system, thus the rules.

mtn wrote: Ok, another question: Do we need to incorporate before we purchase domain names if we want to write them off?

You seem to be a little focused on what you can write off...apologies if this isn't so, but that's the wrong way of looking at business overall, IMO.

Starting point should be: "What is the most potential $ she can make in a given week." and work backwards from there.

Can she charge $40/hr for her services? $100/hr?. And then is there 20-30 min of travel time/setup between each billable hour. This will take the per hour rate way down.

Are the resulting numbers reasonable? You don't want to buy yourself a job, as they say.

It's great to start a business and not need the income, but the flip side is if you're not hungry you might not hustle like you should.

My advice would be to spend a 'lot' on initial marketing, the minimum governmental requirements, the minimum office supplies...shoestring the rest...and go out and get as many good paying customers as possible.

Interesting thread so far. I'm in this one to learn.

I know there are lots of us here referencing taxs. You need to get out of your head that things are write offs. First off a write off is pennies on the dollar. If you have a $1 write off and it is coming off your taxs as a reduction of your proffit than the actual money not paid in taxs is litterly pennies. For easy math say you have 100 dollars in proffit and you have a 20 percent tax rate. Your taxs will be $20. If you get a "write off" of say $10. That reduces your taxi LE proffit to $90. So you would be paying %20 on $90. Meaning you'll now be paying $18 in taxs. So you would be only reducing your tax burden by $2 but you spent &20 to do that.

The bottom line for slid to keep track or write offs but don't make purchases based on them. Instead you should focus on saving money when you spend it and let the write offs fall as they fall. If you are making a purchase and justifying it as a write off you are doing it wrong. You make a purchase because it is something that your company needs to make money. Look st purchases as buisness expenses and work really hard at keeping them as low as possible. This will make money. Making a purchase based on if you can write it off is an absolute way to fail at buisness.

Another way of looking at it is to alway think of spending in terms of how is this expenditure going to make me money and how can I spent as little as possible to make that money.

Also some times you have to spend more money to make more money. I recently spent $15,000 on a new large format plotter scanner. I did so because it will make me money. After i then called my CPA and let her figure out if purchasing it in cash versus financing or leasing it was the best option as there are advantages to all and down sides as well. Where I Made money on this is by getting it as cheaply as possible and by alowing me to provide services in house better and more efficiently. I could care less how it is handeled with respect to taxs as long as it is handeled in the best way possible. I did not make the purchase decision based on the tax end of things.

If you have a choice to make a purchase based on it being a write off or just paying the net tax reduction and putting the balance in the bank the latter will always win.

Oh and purchasing ten or twenty domain names is to me a wast of money. I have one. The internet is only there for people to verify if you are a real buisness it is not a way to get buisness. Your number one way to get buisness is word of mouth. Happy customers will tell other people. They will probably then look at your web page. 99.9 percent of buisness will come from some place other than the web. Don't get hung up on the web and get talked in to some huge program. Get a page that sais who you are where you are hours of operation and services provided and most importantly how to contact you. Make it neat and professional looking. That is it. It is really easy to spend lots of time and money on this I get people trying to sell me a web presence all the time but no one will except payment based on a percentage of buisness generated by my web page. That should telll you something.

dean1484 wrote: Oh and purchasing ten or twenty domain names is to me a wast of money. I have one. The internet is only there for people to verify if you are a real buisness it is not a way to get buisness. Your number one way to get buisness is word of mouth. Happy customers will tell other people. They will probably then look at your web page. 99.9 percent of buisness will come from some place other than the web. Don't get hung up on the web and get talked in to some huge program. Get a page that sais who you are where you are hours of operation and services provided and most importantly how to contact you. Make it neat and professional looking. That is it. It is really easy to spend lots of time and money on this I get people trying to sell me a web presence all the time but no one will except payment based on a percentage of buisness generated by my web page. That should telll you something.

Truer words have seldom been spoken.

Good stuff gang. I just bought my new domain. Steelcandy.co More to come later but lots of good info to consider in here. keep it up

start with a DBA and sufficient insurance, begin conducting business.

If it grows and you have potential liability and want to take advantage of taxes, consult an attorney and a CPA and form an S-Corp or LLC.