How to Start a Business and Make it Legit
If you asked me one skill people who want to start a business should have, it’s being able to use Google! That, and having the patience to find what they’re actually looking for. 😜Really though, there are SO many resources online to help lead you in the right direction, if you stick to it. I certainly don’t know everything, but I’ve definitely learned A LOT along this journey. I can’t tell you how many hours I’ve spent researching tax structures, business licenses and watching Youtube tutorials to learn different things in Photoshop and Illustrator. That being said, starting a business can be overwhelming as HECK! Sometimes it feels like there are just so many things that you can get overwhelmed and then give up before you even start. I get it.
Over the years, I’ve had so many business owners reach out and ask for help on various things so I thought, how helpful would it be to have a blog post covering a lot of the resources and tips I share? A guide covering common business topics so you had a basic direction of where to start looking and better yet, what you should actually be looking for. So if that’s what you need right now, then this blog post is for you!
Now before I get started, I have to add a disclaimer: This post is based off my own personal experiences and I’m not an expert on each topic discussed. It’s always recommended to consult with a professional to make the right decisions for your business.
Getting Official :: Business Licenses
First things, first. If you’re ready to take the first step of making your business legit it’s time to look into getting the appropriate business licenses for where you live. There are several different structures you can file for and here are some of the most popular:
Sole Proprieter: If you are a single-owner business or a couple that runs a business you may use this structure. It’s one of the most common and is easy to form which is why a lot of people start out with it. The one important thing to note on this structure is you are personally liable for all financial obligations of the business. Essentially that means there is no separation between your business and personal assets, so if heaven forbid you got sued, you would be held personally liable too.
LLC: Another one of the most popular structures is a LLC. This option is highly recommended because it separates you from your business so that you are not personally liable. This is different from the sole proprietor because if you were to get sued and were a LLC, you can not be held personally liable. That means that your personal assets are separate which gives you more protection should anything unfortunate happen down the line. Another perk of being a LLC is it’s flexible. You can have a multi-member LLC and it also provides different types of tax filing options.
Corporation: There are two different types of corporations — S-Corps and C-Corps and the recommendations typically differ on the type of business you have and how many people are involved. Corporations are a little more complicated in their nature because they require more things to be recorded but depending on the state you live there may be tax benefits. Similar to the LLC, corporations also separate your business from your personal assets.
Now here’s where your own research comes into play… each state has different requirements to set up these filings (I know... tricky huh) but typically you can find all of this info on your state government website. Here’s an example of what my home state of Washington’s website looks like. Legal Zoom and Nolo are also both helpful resources to help you sort out what structure is right for you as well as detailed instructions on what to file in your state. If you don’t have a lawyer, they can also link you up with local options to advise or help you actually file.
Beyond getting your state license, make sure you also do research on any necessary permits or city licenses you may need too. Again, these will differ based on the state you live and operate in, but I mention because some cities in Washington (including mine) require city permits. You may also need a sales tax permit. It can be a little overwhelming at first but hopefully, this gets you started in the right direction.
Getting Official :: Contracts
The next step to getting official is getting your contracts in order. You want to make sure you are protected for all worst-case scenarios — justttt in case. Hopefully, you won’t have to deal with too many of those but it happens, which is why it’s so important to make sure you’re protected. Depending on the nature of your business, the terms of your agreements are going to vary but here are some things to consider having in yours:
Outlining your scope of work and terms of your projects
Payment explanations with due dates and late fees
Copyrights and trademarks — outlining who owns the work you do (important if you’re a designer/photographer or in the creative industry)
Returns/refunds or cancellation policies
Portfolio rights — if you want to include in your portfolio
The terms you include will likely change over time too (and that’s okay to get them updated). You may find yourself in situations one day that you didn’t think would be an issue before so know that contracts can be amended. Like your business structure, it’s important to make sure you’re actually protected so be careful of just copy and pasting contracts. That may seem like the easiest option, but you don’t know what the agreements were for or if they would actually hold up in court.
If you don’t want to hire a lawyer, I recommend looking at businesses that offer DIY style contracts that have been created by lawyers, but that you can customize for your business. It’s a more affordable option and is a great place to start. Sam Vander Weilen who offers DIY legal templates that I’d recommend checking out. Nolo also has some templates and can also match you with a lawyer who can provide consulting on the topic you need help with.
Once you have your contracts in order here’s the important part… USE them always and forever! No matter how small the project. When you’re getting started or even further down the road it can be easy to be lax about agreements with people you know, but it’s just not worth it. Your business isn’t just a hobby and it’s so important to outline terms so that both parties understand the agreement and have signed off on it in case the situation goes sour.
Getting Official with Money :: Taxes
Not going to lie, sorting out taxes was one of the things that almost intimidated me from starting a business in the first place 😱. For real though, figuring out taxes and tax forms are the oneeee thing that no matter what I read I still feel confused about. So if there is one thing you invest in right off the bat, I recommend it’s an accountant. I’ve been working with the Countless team for several years now and they rockkkk! They specialize in working with online businesses around the country and actually speak to you in a language you can understand. When you hire an accountant, you don’t have to have them do everything for you either. I actually manage my own bookkeeping (for now at least) and have done consulting with their team to make sure I’m keeping track of the right things throughout the year. This is just one part of business I reallyyyy didn’t want to guess about and I would give the same advice to every other biz owner.
Beyond making your tax filings more complicated though, saving for income taxes can come as a surprise to some new business owners, and not the good kind of surprise. Since you are not an employee you will not have taxes taken out of your pay automatically. That doesn’t mean you don’t have to pay them though! Uncle Sam def wants his chunk and you’ll be required to pay them quarterly to avoid penalties at the end of the year. Here’s a look at the dates for reference:
Quarter 1: January 1 to March 31 - Estimated Payment Due April 15
Quarter 2: April 1 to May 31 – Estimated Payment Due June 15
Quarter 3: June 1 to August 31 - Estimated Payment Due September 15
Quarter 4: September 1 to December 31 – Estimated Payment Due January 15 of the following year
Your specific situation will change the amount you are recommend to save from each payment but 25-30% is a good standard to start with. This is why having an accountant is gold because they can give you a better estimate on that plus check-in with you through the year as your income changes! In my mind, the process should be simple… you should be able to type in how much you make and wa-lah get an amount you should pay, but it’s not that way. The formulas are confusing and even when accurate, they’re still “estimates” sooo now you see why having an accountant is super helpful — even more so if you live in a state that has state tax as well.
A lot of businesses slip up in saving for taxes and get that crappy surprise during tax season, which you want to avoid. So something I recommend is having a separate bank account just for your quarterly taxes. My accountant provides me with estimates to save each quarter so I usually divide that by three and have an automatic transfer scheduled. You can do whatever works for you, but here’s the key… don’t touch that money! I use Mint for budgeting and I have that account switched off so that I don’t even see that money.
Once you have your estimates, each quarter you will need to mail in a check with a payment to the IRS and your appropriate state departments. Another option is paying your federal estimated taxes online through EFTPS. If you do that, just make sure you consult with your accountant first because if you are a sole proprietor or LLC you will need to make sure the payments come from you personally and not your business because both are pass-through entities.
Getting Official with Money :: Getting a Bank Account
Let’s talk mulah! Now that you’re getting your business legit, it’s time to get a business bank account. To do so typically you will need an EIN which is essentially the social security number version for your business. Once you’ve filled for your business license you can apply for an EIN online. Some bank accounts will also require copies of your business license or organization files so you’ll need to check with whatever bank you decide to go with.
Which brings me to the next topic… picking a bank for your business account. Similar to personal bank accounts, many business accounts have specific requirements that must be met each month or monthly maintenance fees and if you’re like me, you probably want to avoid some of those! I recommend looking into local bank options or credit unions to try and avoid fees. There are also some really great online banking options that have NO fees or minimums.
Getting Official with Money :: Invoicing & Accounting
Now it’s time to talk about actually keeping track of your expenses and getting paid — something that is important! There are TONS of options out there now that you can use. Here are a few that I’ve used for my business or have been recommended.
Wave Accounting: This was a recommendation by my accountant that is totally free and comparable to Quickbooks/Xero. Yes, really! Wave is the service I’ve used the last couple of years now and it’s been really great. They also have different upgrade options like payroll if you’d like to run that through the platform too.
Quickbooks: Quickbooks is one of the OGs of the accounting world. They offer a variety of different options based on the needs of your business. I started out using the Self-Employed option which was really great because it also provided federal tax estimates. You may just want to check with your accountant on if you need the full version or if the Self-Employed option will cover your bases because they’re totally different!
Xero: This is actually my accounting team’s favorite and another really popular option. Similar to Quickbooks, Xero offers a variety of services to allow you to keep track of your accounting, send invoices and manage expenses. The pricing is pretty comparable to other services too so it’s really a matter of interface. Both offer free trials so don’t be afraid to see which you prefer!
Harvest: As you’re sorting out how you’ll accept payments, you’ll find that a lot of payment processors will take a hefty fee. For example, Paypal and Stripe (two of the most popular ones) have fees ranging from 2.9-3.49% + a set transaction fee. It might not sound like that much at first but those fees add up! They are tax-deductible but I prefer to save wherever I can. Which brings me to Harvest. Harvest is the invoicing/payment processor I use for the majority of my projects. Here’s the gold… there’s an option to accept e-checks (ACH payments) through Stripe which have a max $5 fee per transaction. Sayyy whatttt. Here’s an example… if I had a $1,000 payment come through, the standard fee with Paypal/Stripe would be $29.30 meaning I would get $970.70 after the fees. With Harvest, it would only cost $5 cents leaving us with $995. That’s just one transaction too! So what’s the catch? Using e-checks require clients to login to their bank account via Plaid and that option only applies to ACH payments and not credit cards. The payments also take longer to process, but the savings is worth it to me! Think of it like a digital check. Harvest also allows you to accept credit card payments if you don’t mind the fees too. It’s just a matter of adjusting the settings in the back but I try to stick to the e-checks as much as possible.
ACH Payments: If you like the idea of Harvest and e-checks then also look out for the option of ACH payments. This is another option offered by other accounting software that also have much lower fees (if any at all). Similar to the e-check options, they also connect directly to a client’s bank account. Another awesome way to save mulah on processing fees though!
If you’re looking for something that does more than just accounting or invoicing these are a few great options too:
HoneyBook: Honeybook combines business management with contracts and invoicing — all in one! It’s a bit pricer because of the added services but can be really helpful for keeping things in one spot. I also have an affiliate code which will save you 50% off your first year if you want to check it out.
Dubsado: Dubsado is similar to Honeybook in its offerings. Dubsado also offers accounting features which may cover your needs so that you don’t need separate software.
Getting Official with Money :: Pricing
Your pricing will likely change over time but it’s important to think about it ahead of time. This will make creating proposals and quotes much faster and let you plan ahead so that you’re not always crunching numbers. Here’s the thing to remember too… Making $30/hr at your day job will not translate the same as a freelancer or business owner. You have to pay taxes + pay for all software or supplies yourself, so make sure you run the numbers. It takes some practice (heck I’m still figuring it out sometimes) but it’s important to be smart about your quotes because if you’re not you could end up actually making very little profit or even losing money on products. Here are guidelines to consider
Service prices: Amount of time services will take to complete (time really is money as a small biz owner)! Also make sure you factor in your monthly overhead fees (office/subscriptions/etc.) and last but not least factor in the taxes you’ll need to pay on that income (25-30%).
Product pricing: Product and supply fees, amount of time spent creating or sourcing products, shipping costs, sales tax, overhead business taxes.
When you’re starting out. Consider creating a spreadsheet or getting out your notepad to run variations of these numbers. Sure, it’s a little trial and error over time but it’s worth taking the time to do it.
Supportive Community :: Facebook Groups
Whew, okay we got through some of the more complicated topics so now let’s move on to something a littleee lighter.. supportive communities! Being a business owner is no joke, it is hard freaking work and not everyone has a group of fellow business owners in their back pockets. I know I sure didn’t! Luckily, the Internet has made connecting with others so much easier and trust me, you’re going to want to have a community of people who have walked this walk before. Facebook Groups are one of my favorite ways to connect with others without being bound by location. Here are some of my favorites:
The Rising Tide Society: Filled with a variety of creatives, The Rising Tide Society is all about community over competition and with over 75k+ members it’s one of the biggest groups I’m in. There are also local chapters spread across the country that meet on a regular basis.
Goal Digger Podcast Insiders: Jenna Kutcher is another boss lady kicking butt who has an amazing blog and podcast (I’ll mention again later too) her Facebook Group goes along with her podcast and is also a great community to bounce ideas off of each other and connect.
Boss Project: The Boss Project (formerly Think Creative Collective) is another awesome and active community that offers a wealth of information and networking opportunities.
Local Community Groups: Also don’t underestimate local business groups! Often smaller, they provide a more intimate way to connect with business owners where you actually live. There are SO many Facebook Groups so do a little searching for groups in your area and see which end up being good resources for you! Some also have local meet-ups too which is nice to bring the online world into the real world! Some of my favorite local groups in Washington are Seattle Girl Bosses, Tacoma Boss Ladies, and Nurture Tacoma Women.
Helpful Business Resources :: Books & Podcasts
Okay, last but definitely not least (props if you made it this far) let’s chat other helpful biz resources. Mindset is SO important as a biz owner. I had NO idea the personal development journey I would go on when it came to starting a business. Here are some of my favorite resources for learning new strategies in business, personal development and hearing from other business owners.
Podcasts
If podcasts are your thing then def keep these ones on your radar:
The BossBabe Podcast: Hosted by the ladies behind Boss Babe, the podcast covers a variety of topics that are sooo helpful to business.
EmpowerHer: If you want to get pumped the heck up, Going Bold Studio client, Kacia Fitzgerald is the girl to do it! Seriously though, she’s such a ball of energy and is all about giving you actionable advice for growing your business.
How I Built This: This NPR podcast interviews owners of BIG companies and gives you a rundown of how they built their businesses and their journeys. I love this podcast because it’s so interesting how surprisingly relatable some of the things these founders have gone through are. Plus it’s a nice reminder that even big success stories don’t always have everything figured out.
Goal Digger Podcast: This is Jenna Kutcher’s podcast and I love it because she has a mix of interviews with other business owners but also dives into a lot of different business topics that are related to marketing and getting your business out there.
Books
There are SO many business books out there but here are some that have really stood out for me and taught me lessons along my journey.
The 12-week Year - Brian Moran and Michael Lennington: If you’re looking to amp up your productivity and really hit some goals, this book is for you. They teach you step-by-step their method for looking at every 12 weeks as a year and how it can change how you get things done.
Law of Attraction - Michael J. Losier: Not going to lie, some mindset work seemed kind of silly to me at first but after reading this book and implementing some of the strategies I’ve seen how it can shift your mindset which is really powerful!
The Four Tendencies - Gretchen Rubin: I’m really big on personality tests and traits because I think it helps us identify our strengths, and weaknesses and how to make the most of each. This book took a really interesting approach too because it also gave you tips for handling people of different traits too.
You Are a Badass - Jen Sincero: Another book with mindset as a forefront, I loved this book too. Jen’s approach to writing also feels like you’re talking to a friend which makes some of the topics seem less text booky and easier to understand too.
Okay, 10 novels later… really though haha, that’s a wrap for today! I hope this post has been helpful for you and feel free to bookmark for later to come back to it! If there’s something else you have a question about feel free to leave a comment below and I can lead you in the right direction or add another section if needed to this guide!
Anna Osgoodby
Founder of Going Bold Studio, Anna Osgoodby is an award-winning designer and social media marketing expert. With over a decade of experience, she specializes in helping small businesses with their social media, branding and Squarespace website design.
