What is a Contract and Do You Need One?

Some people shy away from the word “contract” because a lot of time it triggers that feeling of “being sued”. A contract, by definition, is a promise or set of promises that are legally enforceable and, if violated, allow the injured party access to legal remedies. In short, its an agreement between two or more people.

My favorite tool to use for creating, managing, and signing contracts is Hello Bonsai. Its an online portal that allows you to quickly and easily create and send a contract. Hello Bonsai also keeps track of when that contract was read and signed. Pretty handy when you’ve got a lot of moving parts in your project.

If you’ve ever done work for hire, the answer to ‘do I need a contract (an agreement)’ is YES! You should never do work for money unless there is something written down and agreed upon. Even if the work being done if for a friend or family member. Especially if its a family member.

A contract is NOT a piece of paper that you can bully people into doing something against reason or their will. Its a way for both sides of the table to have an understanding of what was agreed upon. We want to make clear our understandings with each other. Whether you call it an agreement, a contract, or bargain, both sides of the contract need to agree to the contract terms.

Contracts are tools used to help both sides understand the expectations from everyone when it comes to work being done.

When creating a contract you’re going to have at least 4 main parts to a contract:

• ID the Players
• Scope of Work
• Payment
• Schedule of Work

As always, please consult with a lawyer for your specific needs and verbiage for your contract.

If you want a copy of a Contract Template, click here!

4 Minimum Parts

ID the Players

You want to know what is a part of the contract for both sides. Who is doing the work and who is receiving the work. The first section of the contract should identify this and spell it out in a way that makes sense for everyone. You need to have it outlined as to who you are dealing with as well as who the customer is dealing with.

The contract needs to specify who you are actually doing work for, who is the point of contact, and what everyone’s roles are. Your goal is to remove guess work and assumptions.

An example would be

I am a freelancer in the United States in Georgia. I work through MowenWorks, an LLC, as a consultant. My client is XYX, INC, represented by Sean Smith.

Your definition of who the different players are and how they are being represented my change depending on your type of work. You will still be outlining who you are doing work for and who has authority and final say of your work.

Scope

The scope of the work should also be defined within your contract. It spells out WHAT you are actually going to be doing for your client. Where does this definition come from? Well, it should come from your Roadmapping Session (FHS Episode 22) that you did earlier in the project.

The scope will include not only what you will be doing with the project but what you will NOT be doing with the project. This can and should include things such as

• Hours of operations
• Deliverables
• Client deliverables
• Disabilities
• Your limitiations

In this section, you should also discuss what the agreed upon outcomes will be for the project. We need to spell out what they are hiring you to do and what the client will be, possibly, doing as well to help reach that goal.

You will spell out what is defined as “DONE” with the project so everyone can agree upon and have and understanding. You wont know if the project is done unless you actually define done. Never ending projects are no-fun…

If you want a copy of a Contract Template, click here!

Payment

Payment agreement is pretty important to…get paid… So we have to talk about expected costs and payment schedule up front. The payment section will outline the total cost and any milestones that will be needed to complete the project.

For example,

The Client will pay the Contractor in milestones totaling $1,100.00 (USD). The milestones will be invoiced as follows:

• $550.00 (USD) on March 15, 2018

• $275.00 (USD) on April 1, 2018

• $275.00 (USD) on April 22, 2018

Make sure to include that you will need to take a deposit before work will begin. This is important as it signals the start of the actual project. Another tactic that you should use is to require the last payment be made at the agreed upon end date of the project.

Since you’ve defined what “DONE” is within the project, you’ll also define WHEN “DONE” is going to happen. Your last payment should fall upon this date or before (when the project is done).

Include verbiage into the contract that allows for penalties and fees if certain payments are missed, late, or the project is cancelled prematurely. This helps solidify the financial commitment for both side to work on the project until completion.

Schedule

How long is the project expected to take? We need to have an agreed upon end time and milestones for the project. The Schedule section talks about time frames, deliverable, and end dates. Don’t shy away from making this section as specific as you need to be. A lot of times, the project can have scope creep and the schedule section will help rein in on what is to be delivered.

Here is an example statement for the Schedule:

The Contractor will begin work on March 15, 2017 and will continue until the work is completed. This Contract can be ended by either Client or Contractor at any time, pursuant to the terms of Section 6, Term and Termination.

The milestones of what will be done is included in the Schedule section. You need to specify what is going to be completed and when. This also includes payment milestones for the work done.

Additional Sections

These four mane section described above are not always the end of a contract. There are usually additional sections that you’ll want to include with the contract. Here are a few of them

• Ownership and Licenses
  • Who owns what and how can they be used
• Competitive Engagements
  • You agree to not work for a competitor while the work is being done
• Non-Solicitation
  • You wont take the clients customers from them while working on the contract
• Representations
  • Defines the roles of the people on the contract
• Confidential Information
  • Information and work is confidential
• Limitation of Liability
  • No one is liable for breach-of-contract damages that are reasonably unforeseen

If you want a copy of a Contract Template, click here!

The post FHS 29 Contracts! appeared first on The Freelancer Head Start.

Tax ID for Your Business

The first thing you’re gonna want to do after you have finally registered with your state is to then hop over to the IRS and grab yourself a unique Tax ID, your Employer Identification Number (EIN). Why do you need an EIN? Well, because you’re going to reach a point where your business is making some decent money and you don’t want the government to come in and seize it all. Al Capone didn’t go down for drug charges…..I’ll just say that.

A Tax ID is an identifier that is used by registered business entities to separate personal and business spending and taxes. You as an individual have a Social Security Number while a business has a Tax ID.

Getting a Tax ID is pretty straightforward and usually takes a few minutes. Its 100% free and can be done in a single sitting. That Tax ID can also be used when purchasing bulk or wholesale items. You’ll be doing taxes at the end of the year (or quarterly) with that specific Tax ID and will be tied to your profit/losses for your business.

https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online

Bank Account

You’re also going to be using your EIN to open up a business bank account. This is your new financial operating point of your business. It’s going to be where you spend and receive money. There are a lot of different offers for from almost every bank in the US, we’re gonna talk about the basic Business Bank Account. We don’t need any additional services other than a place to store your money (that includes credit card processing).

Head down to your favorite bank and ask them about the details of their Business Accounts. Some banks have yearly fees, or minimum amounts, or other special requirements. Go ahead and create an account with an institution you feel comfortable with. Bring your EIN number and your State Entity registration information when signing up. Your bank may need that information.

The other reason that you will want a Business Bank account is because you will eventually get to a stage where you may need to take out business loans or other credit-required actions. Even if you think you will never take out a loan or borrow money, you want to set yourself up now for future in-case situations. Building a relationship and credit with your bank will help in the long run.

Make sure you only spend or receive money that is specific to your business with this account! DO NOT MIX YOUR PERSONAL MONEY WITH THIS BANK ACCOUNT. You will screw yourself over royally because you’ve just created a DIRECT path to all of your personal assets. Which will-be and can-be seized if you’re ever faced with a lawsuit or bankruptcy. You’ve pieced that “corporate veil”.

Make sure you keep track of EVERY receipt for every purchase you make from this account. You’ll be using it as deductibles AND budget tracking.

Business Savings

Yes, that dreadful word; “savings”…..yes..even your business will need it! A business savings can be used used to help keep you going when times get a little rough in the cashflow side of things. Its there to give you the confidence to make decisions that may be risky. Its there to help push your product or service through rough patches and keep things going.

You want to have a business savings account. A WAR CHEST!

To keep things simple, you generally want to have about 3-6 months of $$ stashed away. This is 3-6 months of basic needs (food, light bill, rent, mortgage, etc) to keep you alive and sheltered. This is also going to be your runway of trying things out before you need to alter course.

Trust me, it make your life easier as an entrepreneur when you know you’ve got financial backup in case the poo hits the fan. You will have the freedom to take more risk to reap those rewards.

Record Keeping

Mint – http://mint.com (free)

I use Mint all the time! It does an awesome job of letting me know about my spending habits. I can easily use it to automatically categorize and organize my income and expenses. You can also set goals for yourself and use Mint to tell you REALISTICALLY how to create them. Pretty slick. You connect your bank account(s) to Mint and it helps you keep track of spending and income in a meaningful way.

Alternative: Quickbooks  http://quickbooks.com ($5/month)

I tried Quickbooks a few times in the past as well as the online version. The online version is the preferred route if you’re looking for an all-in-one solution. QB has a LOT of features that might make that $5/month fee very attractive, for sure.

Invoicing

Get Harvest – http://try.hrv.st/1-294321 (Free for 2 project OR $130/year for unlimited)

Harvest is my go-to for invoicing. It definitely pays for itself with your first client. You can send out an invoice and give the option of 2 payment routes: PayPal or Stripe. Invoices get sent electronically either with a PDF, link, or an email where the clients can pay online directly. You get reporting on who is late and who paid on time. The invoices also have automatic reminders that are sent out at specific intervals.

You can also use Harvest to keep track of time to bill hourly, keep track of projects, and keep track of expenses. Reporting is not bad. It won’t tell you categories in your spending like Mint does, but it will let you know if you’ll be pretty close to blowing your budget out the water in overspending. If you have a team of more than one person, you can also keep track of spending and income per-person or per project.

Alternative: Hello Bonsai – https://www.hellobonsai.com/ (3 projects per year OR $192/year for unlimited)

Hello Bonsai originally started as an online contract manager tool. I use it primarily to send agreements to clients for them to sign from their emails or online. It helps keep things simple.

They’ve added additional features such as sending invoices out based on the agreement of your contract. You also have the options of sending out reminders as well as new invoices to your clients. Similar to Harvest, your clients have the options of paying online with PayPal and Stripe.

Getting Paid

Square Cash – https://cash.me/ (free for Personal, 2.75% for Business)

Square Cash is one of the simplest routes you can use to send or receive payments. With the business version, you are not limited to the amount you can send or receive. With a person account, you will have trouble over $2,500.00.

Create a “cashtag” to create a unique URL that you can use to allow people to send you payments online. That URL will display a large payment input method that will send money directly to your linked bank account. Square Cash use a special link called Cash.me to give you a unique link for payments online.

You can also text, email, or link to your Cash.me page to allow your clients to pay online. No, you do not need a Cash.me account to pay someone with a Cash.me app. You will simply be prompted to input your card information.

Square Cash also has a few physical products that you can use for your physical store to process credit cards. Their Point of Sale hardware has been installed in a lot of different stores/locations and are very affordable.

Alternative: PayPal Personalized – https://www.paypal.me/ (2.9% + $0.30 per transaction)

PayPal has been around for a long long time. They have recently caught up with allowing people to pay online with a single URL, link, or text message. You can have either a personal or business version, but the functionality is similar to Cash.me.

You can also use PayPal to handle your invoice payments from Harvest or Hello Bonsai.

Alternative: Stripe – https://stripe.com (2.9% + $0.30 per transaction)

Stripe is an online payment processing software solution that is essentially scaffolding. You register yourself and your bank account to receive payments. Its then up to you to BUILD that payment portal. Stripe takes care of authentication, payment processing, and refunds. You would use Stripe if you wanted to create your own software, website checkout, or custom in-app purchase piece.

The post FHS 5: Money Talk appeared first on The Freelancer Head Start.

Once you’ve identified your customers and audience, you can then focus on registering yourself. This episode will be talking about registering in the United States. Why and how to register yourself can seem daunting, but with a little patience, you’ll come out alright. Registering yourself is the act of telling the world who you legally are. Then you will have a barrier between your personal stuff (like money, car, and home) and your business stuff.  

You can name your business almost anything you want but you’re going to pick something that is in-line with what you are doing and your market. Work on a name for you business that mixes creativity and the market research you just performed. Right now, we’re not going to focus on if it’s already been used. You want to just have a brain dump of possible business names.

When you have a few names that you want to use, sleep on it. See how you feel the next day. You’ll possibly eliminate a few names when you get a rested brain looking at them. Now we need to pick how and what you are going to register.

There are four different ways to register your business

1. Entity Name protects you on a state level
2. Trademark protects you at a federal
3. Doing Business As (DBA) is a “What are you going as…” type of thing. No legal protection but sometimes required based on state
4. Domain name for websites

We are going to focus on  the Business Structure and your Entity Name. Once you’ve honed in on a single name, it’s time to work on your Business Structure. A business structure is a framework for your business that can dictate how it operates, spends money, pays taxes, and how it’s protected. They vary on what your goals are for the business, how much risk you are comfortable with, and what tax benefits you are after. Most people choose either LLC or S-Corp.

PAUSE. At this point, I want you to seriously consider hiring a tax professional to talk to and get their stamp of approval. They will be able to help guide you through the different choices with a business structure and how it pertains to taxes within your specific state. You will need to already have an understanding where you want you business to physically operate and what your long-term goals are for your business. RESUME.

LLC vs S-Corp Business Structure

LLC

In a nutshell, an LLC separates your personal assets from your business assets. This is good in case your LLC faces a lawsuit or bankruptcy. You have what is called a ‘Corporate Veil’ separating your personal things from your business things. This includes bank accounts, physical items, and other assets. Don’t you DARE mix these two. You’ll screw yourself over in the long run.

There are also tax benefits, profit/loss benefits, and legal benefits that may be attractive to you. When it comes to taxes, your profits and losses are passed through the business and attached to your personal income. This can be good because you’re not taxed twice; you don’t have to pay corporation tax. The downside though is that you are considered ‘self-employed’ and will need to pay taxes towards Medicare and Social Security.

If you have more than one member (owner) of the entity, you’re automatically labeled as a partnership for tax purposes. There are no maximum level of members for an LLC while an S-Corp is capped at 100.

Most people can take care of this themselves as it’s not too difficult. Most states have a single page form that you can fill out to take care of this. You’ll have to register with your specific state for your LLC….for every state you want to operate in…. This should run you between $100 – $175 per state on average if you do this yourself.  

You will have to renew this registration yearly to ensure you are still valid. Expect to pay a smaller renewal fee.

S-Corp

An S-Corp is a special type of Corporation that has a whole different range of tax benefits, profit/loss structure, and legal standings. Similar to a LLC, an S-Corp has defined lines of liability protection. Unlike an LLC, you can have Shareholder, directors, officers, and employees. You can attract investors through the sales of stock in your S-Corp. The person who purchases a stock in your company is called a shareholder and is therefore a part owner. You can have a maximum of 100 shareholders and they all need to be US citizens.

With taxes, you are also protected from the double-taxation with a traditional Corporation. You will be filing your taxes once a year once created. After the owner passes away or moves on, the S-Corp still will continue to exist perpetually. There are no maximum level of members for an LLC while an S-Corp is capped at 100.

For an S-Corp route, I would strongly suggest consulting with your accountant to ensure you set this up with in line with your business goals. There are a lot of things to consider with setting up an S-Corp that would take up an entire article. On average, expect to pay about $100-150 depending on your state if you decide to register an S-Corp yourself.

It doesn’t matter what you choose, your own state has different registration requirements that will be slightly different from others. Please verify with your Secretary of State’s website to make sure you fall within the guidelines.

Now you’re ready to register!

Click Here to Get Started to Register

Check for a Domain Name

Before you officially register with your state, let take a look to see if your business name is available as a website. Quickly put in your business name into a search engine and see if a website exists. If you’ve found that both the Domain Name and Entity Name are available, go ahead and register! We’ll talk about how to grab that domain name and create a website in the upcoming episodes/article.

Register with your State

Open up a web browser and navigate to your Secretary of State website. Navigate to the corporation filings section to complete an online registration form. During registration, you will be notified if your name is already taken. At  the same time, check to see if the website domain for you business is already taken THEN check your state’s Entity names. If you’ve found that both the Domain Name and Entity Name are available, go ahead and register!

Congrats! You’ve just made yourself legal. You should get a confirmation email with your official Entity registration information for your state. Let’s talk about getting your finances lined up to start taking in payments the right way.

Secretary of State Websites

1. Alabama Secretary of State, 334-242-7200
2. Alaska Secretary of State, 907-465-2530
3. Arizona Secretary of State, 602-542-3230
4. Arkansas Secretary of State, 501-682-1010
5. California Secretary of State, 916-653-3795
6. Colorado Secretary of State, 303-894-2251
7. Connecticut Secretary of State, 203-566-3216
8. Delaware Secretary of State, 302-739-4111
9. District of Columbia Secretary of State, 202-727-7278
10. Florida Secretary of State, 904-488-9000
11. Georgia Secretary of State, 404-656-2817
12. Guam Government Site
13. Hawaii Secretary of State, 808-586-2727
14. Idaho Secretary of State, 208-334-2300
15. Illinois Secretary of State, 217-782-7880
16. Indiana Secretary of State, 317-232-6576
17. Iowa Secretary of State, 515-281-5204
18. Kansas Secretary of State, 913-296-2236
19. Kentucky Secretary of State, 502-564-2848
20. Louisiana Secretary of State, 504-925-4704
21. Maine Secretary of State, 207-287-3676
22. Maryland Secretary of State, 410-225-1330
23.  Massachusetts Secretary of State, 617-727-9640
24. Michigan Secretary of State, 517-334-6206
25. Minnesota Secretary of State, 612-296-2803
26. Mississippi Secretary of State, 601-359-1333
27. Missouri Secretary of State, 314-751-1310
28. Montana Secretary of State, 406-444-3665
29. Nebraska Secretary of State, 402-471-4079
30. Nevada Secretary of State, 702-687-5203
31. New Hampshire Secretary of State, 603-271-3242
32. New Jersey Secretary of State, 609-530-6400
33. New Mexico Secretary of State, 505-827-4508
34. New York Secretary of State, 518-474-4752
35. North Carolina Secretary of State, 919-733-4201
36. North Dakota Secretary of State, 701-328-4284
37. Ohio Secretary of State, 614-466-3910
38. Oklahoma Secretary of State, 405-521-3911
39. Oregon Secretary of State, 503-986-2200
40. Pennsylvania Secretary of State, 717-787-1057
41. Puerto Rico Secretary of State, 787-722-2121
42. Rhode Island Secretary of State, 401-277-2357
43. South Carolina Secretary of State, 803-734-2158
44. South Dakota Secretary of State, 605-773-4845
45. Tennessee Secretary of State, 615-741-2286
46. Texas Secretary of State, 512-463-5555
47. Utah Secretary of State, 801-530-4849
48. Vermont Secretary of State, 802-828-2386
49.  Virgin Islands Secretary of State, 340-776-8515
50. Virginia Secretary of State, 804-371-9141
51. Washington Secretary of State, 360-725-0377
52. West Virginia Secretary of State, 304-558-8000
53. Wisconsin Secretary of State, 608-266-3590
54. Wyoming Secretary of State, 307-777-7311

The post FHS 4: Why and How to Register Yourself appeared first on The Freelancer Head Start.

As a business owner, you’re going to need clients and customers. There really isn’t any way around it. You can’t operate a business on zero sales. Market research is a tool that will guide you to identifying EXACTLY who is willing to buy what you’re selling. The difficulty for most people is actually finding that group of people. I generally break market research (finding and researching your customers) into two sub tasks; finding customers and reaching customers.

You’re going to want to do what is called “market research”

1. Who, specifically, are you going to be facing (niche, market, clients, customers)
2. What is the problem that you’re hearing the most often
3. What are they willing to pay
4. Is it sustainable
5. Where do they hang out

Finding your customers, what their pain-points, and understanding the value of your services is going to give you that head start that you’re looking for.

Finding and researching your customers is a shortcut to having people pay for whatever you’re selling. You’re able to accurately know what your customers and clients are willing to buy.

Finding Customers/Clients

If you’ve already identified your industry where you’re wanting to plant your flag, then you’ve already made an awesome head start. If not, then you need to sit down and specify who you’re wanting to sell to. Specifically, you want to finish this sentence: “Oh, me? I help __________ to _________ which saves them a lot of time and money.” You’re then going to fill in the blank of one thing you do to a single group of people that helps them save time and money.

That “group of people” piece is now your identified customers and clients. Now we’re going to start identifying where your market lives.

The main tools that I personally use is Reddit.com, Meetup.com, and LinkedIn.com. This is the first step to finding and researching your customers.

http://www.Reddit.com

Reddit is a forum style website that has millions of users and thousands of communities. One of these communities are going to be exactly your client base. On Reddit’s homepage in the upper right corner, you can search for what’s called subreddits. These are the specific communities where your clients and customers live. For example, if you were a web developer who works with non-profit animal shelters, you would want to more than likely search for the ‘animal shelter’ subreddit. Within a few days or hours of using Reddit, you’re be able to identify at least 3-5 subreddits that focus on your niche. This may be one of the easiest places you’ll use when finding and researching your customers.

http://www.meetup.com

Meetup.com is a site that lists communities that line up with who your customers are. You can even find people who have similar tastes, ideas, or industries. Let’s say you’re that web developer that wants to find non-profit animal shelters. You could search “animal adoption drives” or “animal lovers of Atlanta” to find people who have similar interests. Then you can hone in on where and when they congregate. There are dozens of topics or groups or industries that meet all over the world and the States.

http://www.LinkedIn.com

You can think of LinkedIn as a social network for professionals. You can join specific communities within LinkedIn, connect with similar professionals, or target specific people in specific companies. LinkedIn has a very extensive search option that lets you find almost exactly who you’re looking for. You can pay for their premium level account and open up even more options for finding that specific client or audience. 

Other locations where you’re going to find customers include…

• http://www.hunter.io Hunter.io is a researching site that lets you know emails of companies. If you already have a name of someone in a company, you can grab their email address.
• http://www.slack.com – You can join a Slack channel specific to your targeted industry and jump in on the conversation
• Referrals – If you’ve already worked for/with (including professors) someone TELL them that you’d love for them to refer you in the future. Be specific about what type of client you’d like to be referred to.
• Networking Face-to-Face – Go to free trade shows or join an organization that has your target clients. It’s gonna take some practice doing face-to-face conversations, so don’t feel like you’ve failed your first time out.
• Guest Posts – Contact blogs that you follow and offer to guest post. It’s a win-win for both as you get to show what you can do and they get additional content. Finding and researching your customers may become easier after guest posting because they will start coming to you.
• Contact people/organizations/business direct – Use LinkedIn to search for people in a particular field or matches your criteria. Use your local Chamber of Commerce to find companies in your area or demographics. Heck, even looking at Google search results for contact information may work.

Researching Customers/Clients

Now that you know where your customers are, you can then start to research what you’re trying to sell them. You want to validate what you THINK they want to buy to what they are REALLY willing to buy. This is the second part of finding and researching your customers.

http://www.surveymonkey.com

Send out a quick survey to people that you’ve met or collected. Its a lot more effective if you have a phone conversation and talk to your person you are surveying. You can have notes, follow up questions, and get on a personal level with your audience. This does take a lot more time, but you’re able to have a more effective outcome.

https://trends.google.com/trends/

Want to see what is trending right now on Google and compare that with other things? You can use Google Trends to find keywords that are popular within your country/region. You can also see how long that trend word has been popular. Remember “Snuggies”? You can now know what the trend for that search term would be.

Social Media

Get onto Twitter, Facebook, and LinkedIn to search for what you’re attempting to offer. Pay attention to what people are talking about and don’t be afraid to jump in! You can always ask questions about specific topics. After a while, you’ll be able to read between the lines.

Other places you can go to research include…

• http://www.reddit.com Sub-Reddits specific to your industry
• https://stackexchange.com/ – A list of communities where people ask specific questions. Perfect for collecting common, popular, and hot problems.
• https://feedly.com/i/welcome – Feedly is an aggregator of websites that funnels everything into a single dashboard. You can subscribe to a bunch of websites that give you up to date content that you can consume in a single location. You will get a better understanding of what is commonly being said across your industry.
• Mailing list – Create or join a mailing list to collectively gather people who will be your potential clients/customers. You can then interact with this gold mine to get ideas or questions answered.
• Conferences/Tradeshows – You can’t beat the ‘heard it from the horse’s mouth’ effect. Hit the pavement and attend shows or conferences that are specific to your niche. You’ll be able to rub elbows with your clients and get a direct quote of what their problems may be.

Conclusion

Don’t be downhearted if you think you’re taking a while finding and researching your customers. What you’re actually doing is refining your niche and zeroing in on your customers and clients. I would honestly spend about 40-60 hours of effort to find and research your  customers. If you can understand what your audience is thinking, what their pains are, and a way to help, you’re ready to position yourself as the expert! The next step is to then register yourself to make sure you’re legally covered.

The post FHS 2: Finding and Researching Your Customers appeared first on The Freelancer Head Start.

Have you ever wanted to be your own boss but didn’t know where to start? Ever wondered how to start your own business or get your ideas off the ground? Do you feel stuck and overloaded in today’s tech savvy world? Do you shake your fists at these new fandangled websites and gadgets? If you said yes to most or all of these questions; this show is for you! The Freelancers Head Start podcast helps with just how and where to take that first step.

Starting a business may not be as hard as you think. Keeping the business running and operating is the real challenge. But we’ll get to that part soon enough. For now, let’s take things one step at a time. No matter what type of business you want to start, you will need these basic 6 steps.

1 Research Your Customers

Who are you trying to attract to your goods and services? Just because you have an idea, does NOT mean that people are willing to buy. You should test the waters before you dive in. Do NOT, I repeat, do NOT skip this step. You will sink time and money chasing a dream and eventually burn out.

You’re going to want to do what is called “market research”

1. Who, specifically, are you going to be facing (niche)
2. What is the problem that you’re hearing the most often
3. What are they willing to pay
4. Is it sustainable
5. Where do they hang out

Finding your customers, what their pain-points, and understanding the value of your services is going to give you that head start that you’re looking for.

Click Here to Read More

2 Register Yourself

Once you’ve identified your customers and audience, you can then focus on registering yourself. You’re also going to be working on what you’re going to call yourself. You can name your business almost anything you want. Registering your business provides legal protection for yourself, your goods/services, as well as your assets.

Work on a name for you business that mixes creativity and the market research you just performed. Right now, we’re not going to focus on if it’s already been used. You want to just have a brain dump of possible business names.

When you have a few names that you want to use, sleep on it. See how you feel the next day. Once you’ve honed in on a single name, it’s time to register. Each state has different requirements on registration.

You’re going then circle on a Business Structure for your business. They vary on what your goals are for the business, how much risk you are comfortable with, and what tax benefits are you after.

Most people choose either LLC or S-Corp. In a nutshell, LLC separates your personal assets from your business assets. This is good in case your LLC faces a lawsuit or bankruptcy. There are also tax benefits, profit/loss benefits, and legal benefits that may be attractive to you.

An S-Corp is a special type of Corporation that has a whole different range of tax benefits, profit/loss structure, and legal standings. Your business can also take on shareholders and other tax havens with an S-Corp.  All of these are specific to each state

During registration, you will be notified if your name is already taken. Personally, I would check to see if the domain for you business is already taken THEN check your state’s Entity names. Quickly put in your business name into a search engine and see if a website exists. If you’ve found that both the Domain Name and Entity Name are available, go ahead and register!

Congrats! You’ve just made yourself legal. Let’s talk about getting your finances lined up to start taking in payments the right way.

Bonus Interview: LLC vs S-Corp and The Tax Man

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3 Finances

Once you’ve finally registered with your state, you’re going to then hop over to the IRS and grab yourself a unique Tax ID. Why do you need a Tax ID? Well, because you’re going to reach a point where your business is making some decent money and you don’t want the government to come in and seize it all. Al Capone didn’t go down for drug charges…..i’ll just say that.

You’re also going to be using your Tax ID to open up a business bank account. This is your new financial operating point of your business. Head down to your favorite bank and ask them about the details of their Business Accounts. Some banks have yearly fees, or minimum amounts, or other special requirements. Go ahead and create an account with an institution you feel comfortable with.

The other reason that you will want a Business Bank account is because you will eventually get to a stage where you may need to take out business loans or other credit-required actions. Even if you think you will never take out a loan or borrow money, you want to set yourself up now for future in-case situations. Building a relationship and credit with your bank will help in the long run.

Make sure you only spend or receive money that is specific to your business. DO NOT MIX YOUR PERSONAL MONEY WITH THIS BANK ACCOUNT. You will screw yourself over royally because you’ve just created a DIRECT path to all of your personal assets. Which will-be and can-be seized if you’re ever faced with a lawsuit or bankruptcy.

That Tax ID can also be used when purchasing bulk or wholesale items. You’ll be doing taxes at the end of the year (or quarterly) with that specific Tax ID and will be tied to your profit/losses for your business.

Now that you have everything registered and set up to take in money, let’s get you online!

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4 Get Online

When you registered with your state and federal level, hopefully you found that your business does not exist as a website. Hop over to a domain registration website such as WhoIs.com or domaincheap.com. From there, you’re going to register your website name. A website name is basically an online address that tells browsers and device where to go when people pop in your website name. They’re relatively cheap and should run you about $10-15/year.

After you’ve registered your domain name, you’re going to then want hosting. Hosting is the space for you physical files that live on a server. This will be your images, text, files, and content that live on your website. Based on your business, your hosting can fluctuate in price and complexity.

You can use all-in-one solutions such as Squarespace or Wix. You can also hire a professional to take care of all of this for you. Choosing an all-in-one solution may box you into a product that limits what you can and can’t do with your website. A professional developer will be able to develop a solution for you that will match your business goals and online platform you need.

You’re almost done with the basics. Next step is to get the word out about your business.

5 Marketing

Marketing is one step that a lot of freelancers and entrepreneurs tend to skip or gloss over. Marketing does not mean that you have to have that 50’ billboard on the main highway. You can start off small and grow to needing a second blimp during the Super Bowl.

There are essentially 2 different routes to marketing; organic and paid. Each route requires you to have already done research on your customers. We need to know where they hang out, what problems they are having, how you can solve it, and what they’re willing to pay. If you can answer these questions, then you can easily market.

Organic marketing is using free tools such as word of mouth, referrals, social media, emails, and your website. The cost for organic marketing should be low to none since you’re relying on people naturally finding you. Expect to see slow but steady response if you’re consistent.

Paid marketing is a combination of banner ads, search engine ads, or video ads that are created. You would then create rules about where, when, and who sees the ads to ensure maximum ROI. The larger the audience and the longer the ads, the more this route will cost. You will see the quickest response with this route, but it may not translate into a direct sale every time.

Start off with organic marketing to get a rhythm going. Once you start to get a stronger and stronger following, you’ll be able to maximize the effectiveness of a paid advertising campaign.

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6 Get Help!

There is not a single organization or company that has been successful by itself. There are is a mountain of resources and help out there that you can take advantage of. Do not be afraid to reach out and just ask. You’ll be surprised to find that a lot of people are very willing to help with what you’ve got going on. By you asking someone for help on a particular topic or piece of your business, your telling that person that you value their opinions and view them as an expert. How can they NOT be flattered?!

Do not think you have to do this alone. Join a local Meetup.com group. Go to a local Chamber of Commerce event. Talk to people who are in your industry. You want to always be talking about what you’re doing and what you want to do. You never know who you’re going to meet that will help you get over that little hump to tackle the next big thing.

There are so many different avenues for getting advice or help in your business. Social media is possibly one of the easier platforms to raise your hand for help.

You will also need to be open and willing to take a step back and let the expert handle things. Hire help, consultants, and other freelancers when you are moving into an area where you are out of your depths. Do not take it all on; you should build a team of people who you can off load tasks or actions for you business.

Conclusion

Getting a head start as a freelancer or entrepreneur can be daunting at first. But once you start down the path of getting that first client, it becomes easier. You’ll find your stride and identify what does and doesn’t work for you. Don’t think that you have to eat that elephant in one bite!

In the next few articles we’ll be diving deeper into the different aspects of starting down the path of being a freelancer or entrepreneur. The different tech, tools, and advice that will be covered can give you a leg up in your business. We’ll also be talking about challenges and pitfalls that some people face in their own journey.

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