During times of economic turmoil, unemployment escalation, and career uncertainty, starting your own business can be a comforting and proactive step toward reclaiming control over your financial future. Here’s how to do it:
1. Check Your Employment Contract.
If you are currently employed, check your employment contract, employee handbook, and company policies and procedures to verify that your new business will not be in violation of any of your conditions of employment. For example, there might be a company policy against running a side-business, or there might be a provision that gives your employer ownership over certain inventions and intellectual property you develop. Assess whether your new business will create a conflict of interest with your employer. If you signed a non-competition agreement and plan to leave your employer to pursue your new business venture full-time, you will want to ask your attorney to ensure that you are legally able to do so. In the alternative, determine whether there are any modifications you can make to your business model so you can propose taking on your current employer as your client. It’s best to avoid burning any bridges, as the employer you want to tell to “go fly a kite” today could become the client you depend on down the road.
2. Form Your Legal Entity.
Not sure what kind of business to form? Your attorney and accountant can help you select the ideal legal entity structure for your business. Your attorney will draft the required state documents for filing, initiate newspaper publication requirements, draft your internal Operating Agreement or Bylaws, help you file your tax paperwork, and ensure that you have everything in line to launch your operations. Some business attorneys offer flat fee arrangements and quick turnarounds for this service.
3. Track Your Expenses and File Your Taxes.
If you form a limited liability company (LLC), you will be reporting your business income on your personal tax return by completing Schedule C on Income Tax Form 1040. If numbers aren’t your thing, don’t panic. Your accountant can help you, so long as you keep thorough and accurate records of your expenses. Purchase some accounting software, download a business expense app, or label a shoe box, filing cabinet folder, or large envelope as “Receipts 2020”, and start documenting everything and anything business-related. Keep receipts and records for home office expenses, automobile expenses, fees, dues, advertising, labor, benefits, insurance, supplies and equipment, rent, utilities, and work-related travel and meals. There are inexpensive books you can purchase to give yourself a crash course on deductible expenses, and even those books can be a deductible business expense!
4. Get Insurance.
Whether you need unemployment insurance, workers’ compensation insurance, disability benefits, or liability insurance depends on your state, and number of employees. Your attorney can advise you on what coverage your business will require, if any.
5. Get Going!
The biggest hurdle for anyone looking to start a business is the easiest one to overcome: get going! Many would-be entrepreneurs spend countless hours daydreaming about life as a boss, without ever taking the initiative to do anything about it. By simply taking the steps necessary to legally form your business, advertise, secure a client, and get paid, you will be ahead of many. Remember that people generally do what they want to do. If you let yourself focus on excuses like lack of access to capital, resources, time, money, etc., you are just reinforcing your own desire to whine and complain. Starting your own business takes hope, focus, and most of all, action! Get going, and you’ll be amazed at how far you are a few weeks from today. You’ve got this! Need a wingman to hold you accountable? Hire an experienced attorney. No attorney wants to see a client struggle, so by hiring one, success will be sure to follow.
Andrea A. Tarshus, Esq. founded Tarshus Law Firm in 2015 to provide efficient, accessible, and fair General Counsel legal services to businesses and business owners. Tarshus Law Firm represents Western New York and Buffalo based businesses as well as large international and publicly traded corporations in industries such as: audio video (“AV”), products distribution, transportation and logistics, medical marijuana, marketing, social media, healthcare, and other sectors.
Andrea’s engagement with businesses regularly includes negotiating and executing favorable contracts, legal research and writing, project management, administering internal legal and operational controls, problem-solving, and strategizing. She enjoys working with business owners, C-suite executives, and company managers to create a comprehensive legal and business framework that supports operational efficiencies and strategies for growth.
This article is intended to be informational in nature, should not be relied upon by the reader without consultation with an attorney, and does not create an attorney-client relationship between the author and reader.