Hanging out your shingle, part 2
Career Connection: Building your professional future
In this second and final part of our series on starting your firm, we'll cover some specific aspects of being a new entrepreneur, including the legal forms of business organizations, insurance, tax responsibilities and retirement savings.
As we stressed in the July/August issue, the most important thing you can do as a new business owner is to develop a written business plan that will guide your progress as you start your firm and map out your goals.
ONE IS THE LONELIEST NUMBER
One aspect of running a small business, for which entrepreneurs report being the least prepared, is the isolation and feeling of being all alone. This is an especially big change for someone who has been working in a large firm. Even if you don't think you've been particularly social or outgoing with your coworkers or managers, they've probably been sounding boards for ideas and conflict checks.
Think about all your interactions at your current position at the water cooler, before and after meetings, during training and in the hallways. As a small business owner, you probably won't have any of that.
But don't despair. You can find other small business owners with whom you can socialize, exchange referrals and get advice. Contact the local Small Business Administration office and the local chamber of commerce, and attend small-business education classes at community colleges or universities to find your "replacement colleagues." They can recommend attorneys who specialize in helping small businesses; guide you to appropriate insurance agents who understand small-business concerns; and suggest printers, payroll services, commercial leasing brokers and a myriad of other resources.
"Start with an end in mind."
- Stephen Covey
Keep an active social calendar, even if you're extremely busy starting your new firm. Schedule lunches with colleagues and friends far into the future so you'll have social and business events to anticipate when you're totally on your own. Don't lose touch with your work colleagues because they're good referral sources for your new business, and you can use their guidance. Also, prepare your friends and family for their expanded roles as your primary support network.
WHICH FORM OF BUSINESS IS BEST?
Your choice of the legal business form — determined by the options allowed by your state or local laws — will affect the manner and rate at which you're taxed. Your business' legal structure also will determine the extent to which your personal assets are at risk because of your business activities. Different forms of business provide varying taxation and asset protection advantages.
Here are some legal structure options:
- Sole proprietorship.
- LLC or LLP (Limited Liability Company or Limited Liability Partnership).
Each of these has advantages and disadvantages, depending on your business, personal and family situations. Don't choose based on the available forms at the office supply store. A business attorney can help you decide and assist you in filing paperwork plus review your standard engagement letter, potential debt collection and so many other sticky legal matters.
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