Making the Leap: Are You Ready to Be a Small Business Owner?


By Rieva Lesonsky


At some point in every creator’s life comes that “eureka moment”—the sudden realization your side gig could transform into a full-time business. Whether that inspiration is triggered by a flood of sales, new clients, or the universe simply whispering, “now’s the time”—before you declare you’re open for business, you first have to take care of business.


Here’s how to get started.



Decide on a legal structure

Creatives often start their businesses as sole proprietors (or partnerships if there’s more than one owner) because it’s the simplest and cheapest business formation. However, sole proprietorships offer few business tax breaks and no legal protection from business-related lawsuits.


While incorporating as a C Corp or a Limited Liability Company (LLC) (the most popular selection for small businesses) requires filing formation documents with the state and paying filing fees, it shields your personal assets from any business debts or lawsuits.

Resources: CorpNet; Legal Zoom



Separate business and personal finances

Mixing your personal and business finances can get you into legal trouble. For sole proprietors, since your business earnings are tied to your personal income, it’s crucial to keep different books to prove you’re actually a business to the Internal Revenue Service (IRS). If you’re a corporation, legally, you must keep separate finances.

Corporations need to have a business bank account. (Even if you’re not, it’s smart to have one.) First, you must get an Employer Identification Number (EIN) or Federal Tax ID number.

You should also use a different credit card for your business expenses. It’s hard for startups to get approved for a business credit card, so use a personal card exclusively for business charges. Then use an accounting program to keep track of your business activities.

Resources: QuickBooks Online; Zoho Books



Protect your assets

As a creator, you know it’s important to protect your work from infringement. The U.S. Patent Office (USPTO) offers creators three kinds of intellectual property protection.

  • Trademarks. A trademark can be any word, phrase, symbol, design, or combination that identifies your goods or services—for example, your company’s name and logo.

  • Copyrights. A copyright is a form of protection for the authors of “original works of authorship” in any medium of creative expression (words, numbers, notes, sounds, pictures, or other graphic or symbolic media).

  • Patents. A patent grants an inventor exclusive rights to “exclude all others from making, using, offering for sale, or selling” the property.



The other stuff

It used to be essential for startups to write business plans. Today, not so much. But you may need to:

· Calculate your startup costs.

· Get a business license.

· Check zoning laws.

· Define your vision.

· Create a competitive analysis.

· Develop a marketing plan.


Going from running a side gig to a small business owner takes time, patience, and hard work. Making that leap also takes courage. But as the legendary Walt Disney said, “All our dreams can come true if we have the courage to pursue them.”



Rieva Lesonsky is president and CEO of two companies that focus on small business and entrepreneurship—GrowBiz Media and SmallBusinessCurrents.com. She’s a nationally-known speaker, best-selling author, award-winning journalist, and authority on entrepreneurship who has covered the industry for more than 40 years. Before starting GrowBiz Media, she was the long-time editorial director of Entrepreneur magazine. Lesonsky has written several books about small business, including the best-selling Start Your Own Business, and Small Business Hacks: 100 Shortcuts to Success.


Follow Rieva:

Twitter


Stay Connected.
Subscribe to Our Newsletter.

Thanks for subscribing!

We’ll handle your data according to our Privacy Policy

  • Instagram
  • Twitter
  • TikTok

The247 by Lightricks empowers, informs, and sparks the next big idea for creators, by creators. Come curious, Be inspired.