So you’re the proud owner of a new side business? Congratulations! But the work has just begun.
After all, much of your time, effort, and talent is already being spent while you’re trying to manage your career and home life.
But that’s OK. If you’re creating a business on the side while continuing to work in your other job, that puts a little less pressure on you to make money right away.
While having another career can cut into the time needed to launch your side business, it provides two invaluable things for your ultimate success: start-up funds and at least some financial security.
Since you’ve decided to take the plunge, here are some tips to help along the way.
Create a Business Entity
When starting a business, a common choice is to operate as a sole proprietor. Most businesses begin this way because of the streamlined ease of setup.
You can simply file your business taxes with your personal taxes. But for financial purposes, you may consider creating a separate business entity.
There are a number of options, but one of the most common is a Limited Liability Company, or LLC.
Forming an LLC is pretty simple and can usually be done online with your state. Fees typically range anywhere from 20 dollars to at most a couple hundred.
When you create a business entity such as an LLC it helps you separate your business and personal finances, which is very important when it comes to taxes.
Speaking of taxes, here is where creating an LLC can significantly benefit you down the road. If you’re the sole business owner, your LLC is taxed just as if you were a sole proprietor, which makes filing simple.
The real benefit is thinking about the future of the business. As you grow, maybe you will need employees, or take on a partner.
Since you already have the LLC established, this makes that transition a lot easier. Not only that, but you have the option to treat your LLC as a corporation for tax purposes.
This means down the road you could elect this option and possibly save money by utilizing the corporate tax rate.
An even more significant reason is financial protection. Under the umbrella of an LLC your personal assets are generally protected from company debts.
This means in most cases, if your company enters into agreements, or takes on debt, as long as there is no personal guarantee attached to it, your losses are limited to the company.
Job security in today’s world is often hard to come by. Even the most talented among us are at the mercy of major disruptions in nearly every industry. So aside from keeping the resume and skills fresh, what should we do?
A side business is an excellent backup plan. While the business may take some time to reach profitability (or to even monetize at all), once you achieve liftoff it can provide a comforting nest egg to fall back on.
That cash reserve can allow you to take professional chances with your full-time job or even eventually turn that side business into something full time.
Taking Advantage of the Business Climate
There has never been a better time to be a side business owner. Why? Because the business world is changing and technology makes it easier than ever to get started.
It’s incredibly favorable to part-time, freelance and contract work. Because such work allows companies to cut costs, it offers major opportunities for small-but-hungry new businesses.
With so many companies looking for a competitive edge on price, the side business owner will find a great deal of receptiveness to business pitches. So start pitching!
Use the Web
A lot of side businesses start off as hobbies. But they don’t have to cease being a labor-of-love once you monetize.
Each new side business owner should explore the best methods for increasing profitability by harnessing new technology.
For example, if you own a popular niche blog, you’d be wise to explore ad networks, banner ads and product placement. The same strategy can be applied to website owners looking for business.
Maximizing ad value (and pumping up search results through savvy use of search engine optimization techniques) can help turn your new side business into a money maker.
While you may not get rich creating a website, it can make a little money while proving to be a launch pad to something bigger and better down the road.
Protect Your Interests
After business starts rolling in, smart owners will make sure all the legal and financial bases are covered.
You might not have thought about insurance when you got started, but once you’ve created something of value and begin making money, you’ll want to protect this new asset.
So, start thinking about business insurance, maybe an umbrella policy, or even re-evaluate your life insurance to help protect your family.
Starting a new side business isn’t easy, but it can be life-transforming if you stay informed and work hard.