Are you one of the millions of disgruntled “9 – 5ers” who are fed up with the rat race and really want to find a way to work for yourself? Have you ever been bombarded with advertisements full of promises of wealth and freedom and now you want to feel the rewards that await you? Or maybe you’ve tried some things in the past that didn’t work for you?
Don’t give up! The fact that you’re reading this right now proves that you’re still interested in learning how you can realistically work for yourself, increase your income, and maybe even quit your day job.
However, if you don’t have clear credentials — such as being a plumber or electrician, or even a physical therapist, nurse, or accountant — there is still hope. With the right planning, the right tools, some self-assessment, and a genuine desire to succeed, you may soon become “entrepreneur.”
STEP 1 – What will be your business?
First and foremost, what do you want to do? Do you have any special skills or expertise that can support you? Most people fail to understand or recognize their valuable skills and they never give themselves the opportunity to learn how to utilize their God-given talents.
Whether you’re looking for ways to be able to afford to stay at home with your kids, or you’re out of work and want to fully explore all your options, these are just a few ideas to base your business on – full or part time.
o Child care / child care services. If you have children of your own to care for, invite other mothers to leave their children with you too. This is the ideal play date.
o Cooking / catering. You don’t have to be a gourmet cook. Cakes, appetizers or even side dishes can be your specialty.
o Sewing. I’ll bet that there isn’t a single person in your neighborhood who wouldn’t kill if the hem was removed or the skirt removed.
o Typing, bookkeeping services for small companies or even sole proprietors (like you!).
o Pick-up/delivery/task. Have you ever wished you had a personal shopper to clean up, pick up the kids, go to the drug store, or just get milk and diapers? So does everyone!
o Crafts. Can you arrange flowers? Make a gift basket? Knitting? Photo frame design?
o Organize storage space. This is a new request skill. Many will pay a premium for someone to find space for a car in the garage, or have someone organize junk cabinets and drawers.
STEP 2 – Select a business entity
Now that you know what you are going to do in your business, you need to decide what type of business entity you are going to own. In very simplified terms, here are the top picks:
o Sole proprietor. This is the most common for people who find ways to earn money at home. You don’t need to come up with an alternative name for the business; when you file your taxes at the end of a Schedule C year you only have your real name as the name in which you do business. Your income flows through your regular tax return. You may also be eligible for a refund.
o LLC (Limited Liability Company). You can be a sole proprietor – the only person in your business – and own an LLC. The difference here is that your liability (if you are sued) is significantly reduced compared to a sole proprietorship. You are required to have a specific business name. Your income flows through your regular tax return. You may also be eligible for a refund. Depending on the type of business you have, this might be a good choice.
o Company. Should you enter? Probably not. There are few benefits and there is one big downside: you don’t get a tax refund if you join. Corporations are separate entities. It’s not you. It requires a true professional to fill out even the simplest of tax returns at the end of the year. For most home based businesses, this is overkill. If you’re really afraid of losing your home if sued, and you really believe this is the way to go, spend some money and have a serious discussion with your CPA or tax attorney.
STEP 3 – Register your business
Now you need to get a permit from your state to do business. This sounds scarier than it really is. You can do this all yourself. You don’t have to pay anyone to do this for you! Just go to your state’s business-oriented website and look for where the site shows you how to file an “Organizational Budget for Domestic Entities”. You can usually print this with instructions; about 4 pages long. Fill in and submit. It costs around $150 to apply for the first time and another $50+ to renew every year after that. Most states allow you to do this online.
STEP 4 – Get your EIN
You may need an EIN (Company Identification Number). While it’s more likely that you won’t have employees, it shows the IRS that you’re a little more “business-like.” If you have a business where you need a business checking account, most banks even require this to open an account for you.
You can apply for this online at www.irs.gov. Look for the SS-4 form.
STEP 5 – File for fictitious name
Depending on your state, you may be asked to apply for a fictitious name if you are not using your own name to run a business. This costs about $50 in any state.
STEP 6 – Trading tools
Whatever your new business is, there will at least be some special tools you’ll need. Whether it’s a computer, sewing machine, or even pots and pans, make sure you get the best you can afford and make sure you know in advance what you’ll need at least to run your business, and have it ready.
STEP 7 – Profit and Loss
Know your cash flow! Prepare at least a simple Excel spreadsheet to list your expenses and income. Your success depends on how much money you spend (your profit). You don’t want to find out the hard way that you’re not even breaking even.
STEP 8 – Paying taxes
You must pay at least self-employment tax. Don’t wait until the end of the year to find out you owe thousands of dollars for what you make! Set aside at least 25% of your income into an interest-bearing account so you can pay this tax when the time comes.
STEP 9 – Advertise
Get the word out! Print some business cards, hand out flyers, email everyone you know, ask your partner to bring some flyers to work. Place free ads online on Craigslist. Ask people for references.
STEP 10 – Stay focused and organized
No matter what type of business you have, you will need a way to track what you do. It can be as simple as a notebook you carry or as complex as a Blackberry. Remember commitments and appointments, track offers and proposals, follow up on leads, and ask clients to add business. Everything you need to know should take no more than 30 seconds to discover!
If you can achieve all 10 steps above, you are well on your way to success. Developing a secure foundation is more than half the battle.