This article is for people who want to start a business or incorporate an existing one. However even if this is not for you, chances are you know someone who needs this information!
I started my first business in 1992 as Disraeli and Associates or David Disraeli d/b/a Disraeli and Associates, a sole proprietor. Later, I incorporated. During this 25-year period, I have started two companies and helped dozens start businesses, incorporate and repair broken businesses.
Perhaps you should start a business, go out on your own, incorporate your current business, or perhaps not? Over the years, I have met precious few people who were truly happy with their careers. Many feel underpaid, underappreciated, overworked, and stuck. I have highly seen compensation, and highly skilled professionals downsized without notice or regard to their years of service or contribution to the organization. We all know someone who fits this description. Maybe you are unemployed and unable to find work. This article is designed for individuals who have transferable skills either from one company to another, or from their current company to their own. I, David Disraeli, am not a fan of buying a franchise due to the upfront costs and ongoing royalties that are risk-free to the franchisor and 100% borne by the franchisee. However, this does work for many people because it is a “business in a box”.
Many people are intimidated at the thought of starting a business because they feel overwhelmed by all the unknowns. Here is a short list of consideration:
1. A gut check test to see if you have what it takes to be self-employed and rely completely on yourself for your paycheck
2. The legal requirements to starting a business with or without employees
3. How to choose the correct and most appropriate entity (sole proprietor, corporation, s-corporation, LLC)
4. How to file with the secretary of state where you live, obtain a tax I.D. number, open bank accounts
5. Raise capital or bootstrap
6. Write a business plan
7. Create a usable website
8. Choosing a name
9. Developing your brand and corporate identity
10. Employment contracts
I have a complete website dedicated to this subject. For purposes of this article I will address the processes to get started.
After deciding to make the big move, you have some decisions to make and a lot of work to do. The first decision is what type of entity you want. A d/b/a is simply another term (alter ego) for you. There are no tax returns to file unless you sell a product with sales tax. The cost is under $20 and you are in business. You will have to do a name search in your county to determine if the name is available. The form will read; “John Smith doing business as Express Floral”. From that point on you can use just Express Floral in all your communications, advertising etc. Once you have your assumed name certificate you can obtain a tax i.d. number and open a bank account.
The disadvantages of a d/b/a is that you cannot have partners, (unless it is your spouse), you cannot raise capital or sell stock and most importantly you have NO liability protection if you have any type of legal issue. It is easy, quick, cheap and may be the right choice. Talk to an attorney if you have questions.
By far the most popular entity is the LLC or limited liability company. An LLC does protect you from liability (unless you are a licensed professional with malpractice liability – in which case the LLC can be ignored). If a former employee or unhappy customer sues you, or someone gets hurt – they sue the LLC, NOT YOU. LLC’s come in different flavors, but control is vested in the manager(s) not shareholders (called members), unless you decide to choose a member-managed LLC. You can get investors who are passive but have no say in the daily running of your business. In a regular corporation there are situations where your shareholders can meddle. This article is not the forum for a complete discussion on LLC’s or corporations, taxes, or liability. If your situation is complicated, then you will need professional guidance. The next step is to decide what you are going to provide, your pricing, and how you will market your product or service. This is where a business plan will assist you to navigate the decisions you will need to make. The best advice is to get advice. If you take on a partner or investor, put everything in writing! If you want to discuss your concerns about the above-mentioned information, contact me at david@pcfo.net or 512-464-1110. Here is a short video on what a personal CFO is