So You Want to Be Your Own Boss

If you want to start a business but don't know where to start, don't worry--you are not alone. In fact, given the new economic reality of our time, more people than ever before have found the "job" they thought was waiting for them doesn't exist. Others have come to the conclusion that they would rather create work they love, constructed to fit with their own life goals. No matter what the motivation is to be your own boss, you can start today.

Here are 8 Tips to Get You Started:

1. Take a Stand for Yourself.
   If you are dissatisfied with your current circumstances, admit that no one can fix them except for you. It doesn't do any good to blame the economy, your boss, your spouse or your family. Change can only occur when you make a conscious decision to make it happen.
2. Identify the Right Business for You.
   Give yourself permission to explore. Be willing to look at different facets of yourself (your personality, social styles, age) and listen to your intuition. We tend to ignore intuition even though deep down we often know the truth. Ask yourself "What gives me energy even when I'm tired?"
   
   How do you know what business is "right" for you? There are three common approaches to entrepreneurship:
   
   Do What You Know: Have you been laid off or want a change? Look at work you have done for others in the past and think about how you could package those skills and offer them as your own services or products.
   
   Do What Others Do: Learn about other businesses that interest you. Once you have identified a business you like, emulate it.
   
   Solve a Common Problem: Is there a gap in the market? Is there a service or product you would like to bring to market? (Note: This is the highest-risk of the three approaches.) If you choose to do this, make sure that you become a student and gain knowledge first before you spend any money.
3. Business Planning Improves Your Chances for Success.
   Most people don't plan, but it will help you get to market faster. A business plan will help you gain clarity, focus and confidence. A plan does not need to be more than one page. As you write down your goals, strategies and action steps, your business becomes real.
   
   Ask yourself the following questions:
   - What am I building?
   - Who will I serve?
   - What is the promise I am making to my customers/clients and to myself?
   - What are my objectives, strategies and action plans (steps) to achieve my goals?
   
4. Know Your Target Audience Before You Spend a Penny.
   Before you spend money, find out if people will actually buy your products or services. This may be the most important thing you do. You can do this by validating your market. In other words, who, exactly, will buy your products or services other than your family or friends? (And don't say. "Everyone in America will want my product." Trust me--they won't.) What is the size of your target market? Who are your customers? Is your product or service relevant to their everyday life? Why do they need it?
   
   There is industry research available that you can uncover for free. Read industry articles with data (Google the relevant industry associations) and read Census data to learn more. However, the most important way to get this information is to ask your target market/customers directly and then listen.
5. Understand Your Personal Finances and Choose the Right Kind of Money You Need for Your Business.
   As an entrepreneur, your personal life and business life are interconnected. You are likely to be your first--and possibly only--investor. Therefore, having a detailed understanding of your personal finances, and the ability to track them, is an essential first step before seeking outside funding for your business. This is why I recommend setting up your personal accounts in a money management system such as Mint.com to simplify this process.
   
   As you are creating your business plan, you will need to consider what type of business you are building--a lifestyle business (smaller amount of startup funds), a franchise (moderate depending on the franchise), or a high-tech business (will require significant capital investment). Depending on where you fall on the continuum, you will need a different amount of money to launch and grow your business, and it does matter what kind of money you accept.
   
6. Build a Support Network.
   You've made the internal commitment to your business. Now you need to cultivate a network of supporters, advisors, partners, allies and vendors. If you believe in your business, others will, too.
   
   Network locally, nationally & via social networks. Join networks like NAPW.com, your local chamber of commerce, or other relevant business groups. Here are some networking basics:
   
   - When attending networking events, ask others what they do and think about how you can help them. The key is to listen more than tout yourself.
   - No matter what group you join, be generous, help others and make introductions without charging them.
   - By becoming a generous leader, you will be the first person that comes to mind when someone you've helped needs your service or hears of someone else who needs your service.
7. Sell By Creating Value.
   Even though we purchase products and services every day, people don't want to be "sold." Focus on serving others. The more people you serve, the more money you will make. When considering your customers or clients, ask yourself:
   
   - What can I give them?
   - How can I make them successful in their own pursuits?
   - This approach can help lead you to new ways to hone your product or service and deliver more value, which your customers will appreciate.
8. Get the Word Out.
   
   Be willing to say who you are and what you do with conviction and without apology. Embrace and use the most effective online tools (Twitter, Facebook, YouTube, LinkedIn) available to broadcast your news. Use social networks as "pointer" sites; i.e., to point to anything you think will be of interest to your fans and followers.
   
   
   Even though social networks are essential today (you must use them!), don't underestimate the power of other methods to get the word out: e.g., word-of-mouth marketing, website and internet marketing tools, public relations, blog posts, columns and articles, speeches, e-mail, newsletters, and the old-fashioned but still essential telephone.
   
   If you take these steps, you'll be well on your way to becoming your own boss. It's important to remember that you are not alone. If you want to "be your own boss" but you still feel stuck, reach out and connect with other entrepreneurs in a variety of ways. You may be surprised by the invaluable contacts that are right at your fingertips.

General Partnership

Partnerships are associations between two or more persons to carry on a business. The definition of “person” here is very broad and can be an individual or an entity, such as a U.S. citizen, nonresident alien, resident alien, corporation, limited liability company, trust, or other type of partnership. However, there are no registrations to file, and a written partnership agreement is not required, although it is usually a good idea.

The partners of a general partnership are jointly liable for the debts, claims, or other obligations arising from the partnership. There is an unlimited personal liability for claims against the business, even those resulting from another partner who is acting for the business. From a tax perspective, general partnerships are like sole proprietorships. That is, they are pass-through entities and pay no tax on their own. All partnership gains, losses, credits, and deductions are taxable to the partners individually. While the partnership pays no taxes, it does report the taxes because it is required to determine each partner’s share. Thus, as with a sole proprietorship, the partners derive no preferable tax treatment (aside from being able to divide the tax liability between two or more entities) by holding the business as a partnership.

Sole Proprietorships

All the business’s assets, liabilities, and operations are a part of the owner’s personal financial situation. As the name indicates, there can only be one owner of the business, and no separate business entity exists. Because of that, for tax purposes, everything from the business (profits, losses, etc.) is passed through to the owner. The business doesn’t file its own taxes, and there are no papers to file to set up the business. The owner is also personally liable for his or her business and any legal action that may be taken against it. The best bet for a sole proprietor to help protect against any type of legal claim is to purchase commercial liability insurance. Although there is the advantage of being the only person in control of your business (i.e., no shareholders or partners to answer to), it also becomes a potentially huge liability when you consider that you are solely responsible both on the business front and personally.

How to Become Your Own Boss?

For many people who own their own businesses, they have found that working for themselves is far more rewarding than working for others. But, they’ll also probably tell you that it’s a lot more work. There are a number of ways that individuals can own their own business: sole proprietorship, partnership, corporation, LLC, etc. The way your businesses is established could mean a lot on tax day. Some forms of ownership, like partnerships and S-corporations, have their business year end at the same time as individuals do: December 31, or the end of the calendar year. However, C-corporations can choose when their year ends. This could amount to a large difference as far as taxes are concerned. “Incorporation” doesn’t mean a huge building with hundreds of employees, with you at the helm of a multinational enterprise. A corporation is an entity without a soul, a few legal documents that reside in a file folder at your attorney’s office. But should you incorporate your business? Can you even consider this as an option? The answer to the second question is almost always yes. Although there are associated costs with incorporating, incorporating your business may be the best option from a tax standpoint. (Though you may find that your business is better suited to another form of ownership.) You just have to follow the rules that go along with it. But what if you work for someone else? Can you still incorporate? The answer is still yes, as long as you have income other than your employment income. For example, if you own some rental property and derive an income from that property that is separate from your work income, then it may be in your best interests to incorporate your side business of owning and running the rental property. Business owners are allowed to pay their expenses before they pay their taxes. This is something that employees aren’t allowed to do. Look at your most current paycheck stub. What is the first thing that comes out of your pay? If you invest in your company’s retirement plan, that does. Otherwise, taxes come out first. And by taxes, I’m including federal, state, local, and Social Security taxes (FICA). Then the rest of the money goes to you, and you try to use it in the wisest way possible. With business entities, it earns as much as it can, spends as much as it can, and then is taxed on the rest. In this manner, business entities, such as corporations, are probably the biggest tax loophole left! By owning your own corporation, or being selfemployed, even everyday things, such as car payments and gas for your vehicles can become business expenses. You just have to use your pretax dollars from your business for these things.

An important advantage to incorporating is to protect your personal assets. What if one of your tenants from your rental properties sued you? If you incorporated your rental property business, then the tenant would be suing the corporation, not you as the individual. But if you hadn’t incorporated, you, the individual, would be sued. How accepting are you of losing your personal property in a lawsuit?