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Have You Ever Started Your Own Business?

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Have You Ever Started Your Own Business?

Old 03-25-08, 01:24 PM
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Have You Ever Started Your Own Business?

I have always been curious about what starting your own business would entail. I deal with other businesses everyday, although usually I'm dealing with them after they are being liquidated, going bankrupt, or trying to avoid going bankrupt. However I have never been there to see it from the beginning. How many of you have done it? You had your idea, you made your plan, you secured financing, whatever else you need to do to start your business. Would anyone care to share their story?

I ask because I have been thinking about this more and more while at my current job. I enjoy it well enough for what it is, but I often wonder what it would be like to have my own business. This job is practical, it's safe, but there isn't too much excitement. The money is good, and I certainly enjoy it more than when I was auditing, but it still doesn't have that punch. I know it's stupid to be an accountant and sit here and complain his job isn't that fun, but here we are.

So what does it take? How did you know what to do? Did you have someone help you along the way? Did you read books about starting your own company? Why did you pick that business? How much research did you do? Did you write a business plan? How did you come up with the financing? I don't know what kind of business I would start though I do have some ideas. More than anything I want to know if I could do it. I want to at least give it a try. I don't want to sit around, and get into old age saying to myself that I wish I could have started a business. If it fails, it fails, but I want to know that I gave it a shot. What advice would you have for someone in my position?
Old 03-25-08, 01:35 PM
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It was something a friend and I did on the side and it eventually became pretty clear that we should establish a business to do that. We were lucky in that we were in a service industry so there was no setup cost aside from establishing the LLC and getting registered etc. No specific equipment, inventory, etc.

My advice would be that more than likely if you want to start a business, you should have a decent idea of what it is already, since you must be good at something already or you see an opportunity to be better in a new, cheaper, faster way.
Old 03-25-08, 01:46 PM
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Do you mind saying what your business was exactly?
Old 03-25-08, 01:50 PM
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I run my own business... Web development out of my home. No financing required, similar to the Bus. So I'm not sure it fits into what you are looking for. The paperwork and setup was pretty easy. I got some books on different types of corporations, etc to find out what model would fit best, and then pretty much ignored what they said.

The hard part up front is finding clients but it didn't take long to generate some business and after that it's been fairly easy.

It would be much more work running a restaurant or something.
Old 03-25-08, 01:58 PM
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spain: Graphic design. My friend/partner did web development (coding etc, which I hate).
Old 03-25-08, 02:53 PM
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Most state websites have a "Start your own business" page that gives you all the info you need. I assume it varies, but you will need to get business licenses, register with the state, etc. Don't have employees, if you can help it. They aren't worth the paperwork.
Old 03-25-08, 02:58 PM
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Originally Posted by kvrdave
Most state websites have a "Start your own business" page
You're giving away all the secrets!

Some of us are trying to compete here!
Old 03-25-08, 03:03 PM
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Originally Posted by spainlinx0
I have always been curious about what starting your own business would entail.
A lot of paperwork, a lot (I mean a painful lot) of taxes, and a willingness to work 24/7 for the first few years at least.

I realized very quickly, it wasn't what I really wanted to do.
Old 03-25-08, 03:05 PM
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Originally Posted by 4KRG
A lot of paperwork, a lot (I mean a painful lot) of taxes, and a willingness to work 24/7 for the first few years at least.
Depends on the business. I think mine paid (the business itself) a tax rate of <1%. (I'm even counting licensing fees, etc.) It depends on how you put it together.
Old 03-25-08, 03:11 PM
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Did you guys do it alone? Did you start a corporation with some other people? Would you have rather done it the opposite way? I have a friend here at work, and this is what we both have been talking about lately.
Old 03-25-08, 03:16 PM
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Originally Posted by spainlinx0
Did you guys do it alone? Did you start a corporation with some other people? Would you have rather done it the opposite way? I have a friend here at work, and this is what we both have been talking about lately.
The dad of a friend of mine runs a business consultancy / CPA and we basically met with him and ironed out the details of how the corporation would be established. They got us our TIN, license, etc. It helps that Delaware is one of the easiest places in the world to set up a business.

You don't need other people to set up a corporation. A corporation is simply a separate legal entity. It can have one owner, or more.

I too, had a decent amount of reservations and thought that the cost would be very high. We made up the cost of establishing the corporation basically in a day's work.
Old 03-25-08, 03:22 PM
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My wife started her own a couple of years ago. Really simple. It is a speech therapy business. She bills clients directly, doesn't take insurance, and sees most of her patients at a couple of private schools where they give her office space to practice.
Old 03-25-08, 03:40 PM
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What I meant was did you start your business alone, or did you have the idea and put everything together with other people? I see you and your friend started the business together. That's what I was trying to ask.
Old 03-25-08, 03:42 PM
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Originally Posted by The Bus
Depends on the business. I think mine paid (the business itself) a tax rate of <1%. (I'm even counting licensing fees, etc.) It depends on how you put it together.
Apart from fudging numbers to not shopw a profit on paper, how did you accomplish this?

OP: You should incorporate and it's not too painful or expensive, as others have noted. There may be hoops to jump through if you're in a regulated industry. You will probably get taxed out the wazoo (basically, double-taxed for self-employment or for corporate + income if you draw a salary). And you'll have to pay for all of your healthcare benefits, etc. You lose a lot of perks that are buried in the "job" package when you start your own operation.

Oh yeah. As kvrD hinted, partners/employees are generally a pain in the butt and should eb avoided if possible.
Old 03-25-08, 04:27 PM
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Originally Posted by drmoze
Apart from fudging numbers to not shopw a profit on paper, how did you accomplish this?
The LLC, as set up, pays neither state taxes nor federal taxes. However, the LLC's income does pass through to the owners who are then taxed at their rate. So we're not double-taxed. There is a tax we'd need to pay if we ever hit something like $150,000 in sales per quarter but that's not happening.

Old 03-25-08, 05:31 PM
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Originally Posted by The Bus
The LLC, as set up, pays neither state taxes nor federal taxes. However, the LLC's income does pass through to the owners who are then taxed at their rate. So we're not double-taxed. There is a tax we'd need to pay if we ever hit something like $150,000 in sales per quarter but that's not happening.

If the income passes through, then don't you have to pay self-employment taxes on that income? That significantly increases the tax obligation as compared with tax on regular income. I'm no tax whiz, but that is what I gathered from people I know who have done this. You either tax at the corp. level and then as income, or you pass through the income and then get hit with self-employment taxes.
Old 03-25-08, 05:48 PM
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Originally Posted by drmoze
If the income passes through, then don't you have to pay self-employment taxes on that income? That significantly increases the tax obligation as compared with tax on regular income. I'm no tax whiz, but that is what I gathered from people I know who have done this. You either tax at the corp. level and then as income, or you pass through the income and then get hit with self-employment taxes.
No, there's no self-employment taxes because it's income from a K-1 form. This is how it was explained to us by a conference room of CPAs (ok, one guy and the assistant) and how TurboTax figures it out.
Old 03-27-08, 07:15 PM
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If you feel like you want to start one with or without your buddy, I say go for it. Why let someone else take all the profit?

I had an idea, put together a simple plan wrote down how much it would cost for marketing, licenses, etc and what needed to be done up front and within the first 30-60 days. Then I got the Name, the LLC the insurance and all the necessary stuff I needed to protect myself. With regard to taxes, you'll figure out the best way to file for your own particular business model but I'll be filing as an S corp.

I didn't do a business plan per se, rather my own plan because I didn't need to go to a bank for funding. If you need funding from a lender then yes, you will have to go the who PITA business plan route which will take you quite a bit of time and energy.

Knowing what you do for a living I think that you should go off on your own. You could market to a niche group that you think nobody else is or that your company really isn't working with right now. Since you're in it now you know what to do and what not to do. What you need to think about though is how to split everything with your buddy.

Best of luck to you!

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