Improve Your Secondary Business | Lifestyles
The pandemic does not crush the entrepreneurial spirit. It feeds him.
People normally tied to desks or working in double shifts used locking to initiate side activities, often out of necessity. And some have turned these side concerts into full-fledged businesses.
According to the US Census Bureau, 427,842 new business applications were filed in August 2021 alone. That figure was 288,026 in August 2019.
While a side gig can be spontaneous, growing a legitimate business requires research, planning, and organization. Otherwise, your fledgling business could collapse and burn in a few years.
These basic but essential steps can help you take it to the next level and give your new business a chance to last.
1. CHOOSE A BUSINESS STRUCTURE
There are six common types of business entities: sole proprietorship, general partnership, limited partnership, C corporation, S corporation, and limited liability company. The option you choose determines how your business is taxed, as well as who is financially responsible if your business is sued.
Entrepreneurs often choose the sole proprietorship by default because it’s the simplest, but it’s also the riskiest, says Nellie Akalp, CEO and co-founder of corpnet.com, a document filing service that helps streamline the business creation process for entrepreneurs.
“No registration is required and there are no business requirements,” Akalp says. But “there is no legal separation of the business, so the sole proprietor is personally liable for any debt or liability.”
Registering as an LLC or corporation is more expensive and requires more paperwork, but it protects your personal assets from legal action.
2. OPEN A CORPORATE BANK ACCOUNT
Mixing work and personal finances can get complicated, especially when it comes to filing taxes or getting a business loan. Open a business checking account to keep your business income and expenses organized and easily accessible.
Look for a business account with low or no monthly fees that meets your business’s needs for transaction and deposit limits.
A business credit card can also help you track your spending and identify tax deductions. Plus, you can earn rewards, like cash back rewards on gasoline, office supplies, and business consulting services.
3. IMPROVE YOUR ACCOUNTING
No more manual spreadsheets or shoeboxes full of receipts; switch to accounting software that can do the heavy lifting for you, like tracking cash flows, managing invoices, and generating reports.
Expect a learning curve with any new system, but know that it will help you run better. The right accounting software can also give you a deeper insight into your business and help you identify weak spots and opportunities to save money.
“Accounting is the language of business, so invest the time and money to figure out how to do your books,” says Danetha Doe, founder of Money and Mimosas, a financial education platform for independent entrepreneurs, freelancers and small business owners. “As a business owner, learning to manage your business finances, read income statements, and understand cash flow will make you a better entrepreneur. “
4. DESCRIBE YOUR BUSINESS PLAN
Your side business may have started organically, but turning it into a full-fledged business takes research and planning.
Outline short and long term goals for your business, along with a sales plan, financial projections, and potential roadblocks. Be realistic, set specific goals and explain how you plan to achieve them.
Developing a business plan gives you a roadmap for growing your business. It also shows lenders that you’ve done your homework if you need to get a business loan.
Need help with your business plan? Turn to your local small business development center. These outposts are managed by the US Small Business Administration and offer free business consulting services.
5. INVESTING IN PROFESSIONAL HELP
Entrepreneurs by nature wear many hats. But you don’t have to wear all hats.
Outsourcing certain aspects of your business allows you to focus on other things, such as customer service or product development.
Not plugged into social networks? Consider hiring someone to grow and manage your business’ presence on Instagram, TikTok, and others.
Are you squinting at tax forms? Invest in a certified public accountant to file for you.
“CPAs might cost more than doing taxes on your own, but it will be well done,” says John Pham, founder of The Money Ninja, a personal finance website. “Plus, they’ll maximize your tax deductions, which will most likely give you a higher return than the cost of a CPA.”
NerdWallet: How to write a business plan https://bit.ly/nerdwallet-business-plan
Find a small business development center: https://www.sba.gov/local-assistance/find?type=Small%20Business%20Development%20Center
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