Is This a Real Business?
Is This a Real Business?
Are you treating this as a real business or just something you are trying out to make a few bucks?
This is a Real Business
If you are serious about starting a real business then there are some things you need to consider.
- Will You Incorporate your business?
- Will you have a Bank Account for your Business?
- Will You Hire and Accountant?
- Will You Treat it as its own entity and separate your finances from it?
In the brick and mortar world people start businesses they find a location, build buildings, get inventory, and setup the business.
In setting up your business you need to consider if you will incorporate or be a sole proprietorship. Get a bank account and maybe hire an accountant.
Much of this you can do on your own and very inexpensively. But as you grow it is good to hire the appropriate people for your business such as an accountant, bookkeeper, CPA.
But there are certain advantages of treating this as a business.
Advantages of Having a Business Entity
As a business owner you will want to keep your business separate from you personally. There are good reasons to do this. First if you incorporate as a CORP or LLC then you personally are not liable (I'm not a lawyer or accountant but this is what I have been told. You should always seek legal advice yourself).
Next your finances are treated separately. You can actually reduce the amount you pay for taxes at first if your business is not making money. In essence the money you pay to run your business is a contribution to the business and tax deductible. This is my knowledge of it. Any accountants here can correct me.
My main point is that treating your online venture as a business is what you should do.
You will want to take advantage of any tax and legal benefits you can and protect yourself from any harm.
Business Branding
When you decide to start a real business you need to consider branding. You will now be able to use your business as a brand and begin to build brand recognition. People trust brands and tend to not trust individuals as a whole.
You can build trust as an individual and that is also important if you are your brand.
Companies like Amazon, Coke, and Facebook all started with just a name and as people became aware they became big well-known brands.
If you company brand gets known it will spread and offer a great deal of benefits.
In Closing
In closing I think it is best to treat any online venture as a business. I think setting up a corporation and keeping everything separate is how you can ensure that you keep your personal life safe from harm.
I'm not a lawyer or accountant so I don't know all the legalities of business so its always best to consult with a lawyer or accountant for your business. I do know that there are benefits of owning your own business and keeping it separate from your personal life.
Are you treating this as a business? Let me know in the comments. Also, if you know more please comment and add your knowledge for others to learn.
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To our Success!
- Glen B
Recent Comments
19
Thanks Glen!
Definitely a good reminder. At this stage all my expenses are deductions since I haven’t made any income yet.
But still good to keep separate for tax purposes.
All the best!
KyleAnn
Very excellent thoughts Glen..thank you for making me think about this! Definitely things that need to be considered.
I have been down this road with my Personal Training business. An "S" Corp is by far the best route to take. If you are sure you have a money making business you can deduct your start-up costs. You can deduct expenses(advertising, travel, a good CPA, etc..). The point being separate your business from your personal assets. Incorporating in Nevada is the route I chose and you can do it all very cheaply at LegalZoom. They can handle everything. And you do not need a lawyer.
Have thought about this for when and if I ever start to make some money. The tax benefits will be good keeping this away from personal.
Great post-Glen, I haven't thought about consulting my lawyer about this but maybe I should. Thank you for the advice about this situation I really appreciate the advice because you may have something here that needs to be addressed.
Best wishes on your journey with WA.
Mary
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I just saw your blog and it confirmed a few things for me. I might have missed it in the training but I really wish this was a lesson in itself (assuming people are interested).
Currently, I'm looking at setting up a sole proprietorship...with hopes to turn it into a LLC in the near future. Thanks for confirming what I was thinking.