Have you been working as a freelancer for some time? The next logical step would be to set up your own online business. Starting an online business is an exciting and challenging venture, and though home-based companies struggle with fewer regulations than large businesses have to deal with, there are some legal requirements that you need to meet.
Doing your research in the very beginning and knowing how to set up an online business will save you from a lot of trouble in the future. Here are some useful tips to get you started.
Choose Your Form of Business
There is a number of business structures for you to choose from, each of which carries specific legal and tax regulations. A sole proprietorship is the most simple and widely used business structure to set up a company. It’s owned and operated by one person with no differentiation between the company and the owner. This means that your business is not taxed separately. The proprietor is entitled to all profits and is also responsible for all debt, losses and liabilities, associated with the business.
Register Your Business Name
Even if you’re going to use your own name as your business name, you need to make sure that the name you’ve chosen isn’t already in use and isn’t protected by a trademark.
If you register a business name that already exists, you might be forced to change it, which means that you’ll have to start re-building your brand identity from scratch. Choose something unique and distinctive – it will help your marketing efforts and it will be perfect for building online reputation.
If you have decided to operate as a limited liability company (LLC) or a corporation, you won’t have to register your business name, as it will automatically be registered in the process of setting up the LLC or corporation.
Obtain a Business License
Effectively every business requires some kind of license or permit to function legitimately. It’s important to understand that these licensing requirements range depending on your business type, location, and the respective government regulations in your area.
Find a Good Accountant
Even if you have a small business, you will still need to do bookkeeping. Instead of trying to learn how to do it on your own, invest in a quality accounting service.
Note that accounting involves a lot more than managing the cash flow. It also includes customer, vendor and employee databases that will help you keep track on your current business activities and plan your future transactions.
Budgets and Business Plans
Once you have dealt with the legal aspects of starting a company, you will need to start planning business activities.
Long-term plans are a necessity for every company, regardless of size and industry. Come up with a budget for the first few years and consider the expansion possibilities that will result in portfolio diversification.
An online business will benefit from limited expenditure but you will still need to invest in marketing, staff (especially if you want to expand your activities), product or service creation, legal consultations and accounting services. A rough calculation will give you a better idea about the amount of money you will need in the first years.
Put emphasis on marketing. Every startup needs to gain popularity. Having more people learning about you will increase the chance of finding new clients and building stable partnership. Online marketing opportunities are great for startup owners because they tend to be inexpensive and highly targeted.
Setting up your own business is a great way to legalize and expand you freelancing enterprise. This decision demonstrates to your customers and partners that you are serious about your work and your entrepreneurial responsibilities. Setting up your own business carries monetary benefits as well, as businesses are entitled to tax deductions for business-related expenses such as the use of your car and home office.
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