Open Discussion: Any advice on starting a business?

I'm starting to look at what it takes to start a business - and before you even wonder - no I'm not looking to leave my full time gig at Open Seas. I've always thought, that sooner or later I would have my own business ... and now I'm really looking at what it would take to do so.  There are many guys in what I would categorize as the 'software industry' that I'm looking at as 'models' - they have full-time gigs as well as side businesses.  As I go through the process, I'll share some of these models with you, but in they all have one thing in common:  multiple income streams.  So in short ... I have some ideas, but before I start down the implementation path, I want to stop and consider what it takes to start a business (that will not be my main source of income) and decide the path I want to take in the short term.

Questions I'm starting to consider:

  1. Legal entity type spectrum  - Corporation at one end and Sole Proprietorship on the other end ... what are the real advantages and disadvantages?
  2. Legal costs involved?
  3. What type of 'people' do I need? Lawyer, accountant, etc.
  4. Approximate annual overhead money cost of having a business entity (legal costs, taxes, etc.)
  5. Approximate monthly overhead time cost of #4?
  6. What are good resources to help along the path of starting a small business?

Anyone any advice to share?

posted on Sunday, June 22, 2008 11:15 AM

Feedback

# re: Open Discussion: Any advice on starting a business?

Hi Jason -

These are all very good questions! And it's definitely a sign of wisdom to seek counsel from others, to learn from their successes and mistakes. I wish I had done a better job of that when I started my consulting practice over a dozen years ago.

As someone who is self-employed, I'm regularly asked questions similar to the 6 you've raised in your post. So, I started presenting sessions at user group meetings and at conferences on the topic. It eventually became enough material for a book on the subject.

As for your questions:

1) You want to protect your personal assets with a legal entity. LLC and S-Corps are both designed to do that. LLCs are generally easier and less expensive that S-Corps, but both are good. C-Corps are overkill. Sole proprietorships will not protect your personal assets.

2) Varies buy state and type of legal entity. I used my CPA to help me form the LLC. Very low cost.

3) Again, I used a CPA. And I'd recommend that route. But you can certainly do it yourself if you have the time and inclination. As for me, I'd rather focus on what I do best and outsource the rest.

4) I'm starting to repeat myself, but it will vary by city, county, and state. For example, where I live, there's a $300 / year fee for the LLC registration. The county has a tax on gross revenue. The city has a tax on gross revenue. There's a small property tax for having a home based business. Etc. All of this generally does not add up to too much; it's more of a nuisance than anything.

5) Ahhh, very good question. It does take some time. I'd recommend getting some good accounting software. For years I used Peachtree but that was more than I needed. I'm currently using Small Business Accounting from Microsoft. It's seems pretty good. On a monthly basis, you'll spend more time invoicing/accounting than with taxes. Those usually only occur once per year, except for the quarterly IRS payments and Sales Tax payments.

6) At the risk of sounding like I'm self-promoting, I've written a book that's been well received. It's only $15. There are other resources on the web, too.

http://www.amazon.com/Rational-Guide-Consulting-Guides/dp/0972688854/ref=sr_1_17?ie=UTF8&s=books&qid=1214233521&sr=1-17

http://www.mannpublishing.com/Catalog/BookDetail.aspx?BookID=30


Hope this helps. And please share you're experiences along the way.

Cheers!

Joe
6/23/2008 8:07 AM | Joe Webb

# re: Open Discussion: Any advice on starting a business?

Joe: Wow, thanks for sharing all that. That is exactly the kind of advice I was hoping for. I'll make sure I check out your books.
6/23/2008 5:11 PM | Jason Haley

Post Comment

Title  
Name  
Url
Comment   
Please enter the following code into the box below to stop spammers

   		Enter Code Here *