starting your own business on a budget

Starting Your Own Business on a Budget: Tips & Tricks

starting your own business on a budget

Starting your own business can seem unattainable, especially when you have limited funds to work with. When thinking about launching, you might feel as though you need a large sum of money in order to even begin. But, I have good news; this is not always the case. In fact, I was able to start my own business for roughly $650, including the paperwork to register as a limited liability company (LLC). I still have yet to take out a business loan. So, fret not; starting your own business on a budget (and without a loan) is possible, and the following are some tricks and tips to help you launch:

Starting Your Own Business On a Budget

Don’t quit your day job:

Normally, “don’t quit your day job” implies you should not pursue anything more than what you are currently doing for money. But, when I say this, I mean maintain your full-time job as you develop your dream. Spend a few hours every night after work (or at your leisure, depending on your level of motivation to start) developing your business plan. Know that you want to start a business but unsure where to begin? Pick something you are passionate about or very knowledgeable in.

As you start the process, plug away some money from your full-time job each month for your business. Even if it is just $20 a month, every little bit helps and will make launching more of a reality.

Reach out to friends:

Assuming you have already done your market research and developed a business plan, you can reach out to supportive friends who may be willing to help you with certain services you may need to move forward.

For example, if you are a copywriter needing a logo, see if one of your friends in graphic design would be willing to do a trade for service and/or a discounted rate to create your identity. Most of the time, you will most likely find someone willing to help. Even your friends with a background in law may be available to provide some tips on getting started with paperwork or offer a lower rate to help. You can also use the money you’ve been saying from your full-time job to pay for these services up front. Never assume your friends will do it for free; they are, after all, also in business and need to make money too. Also, don’t forget to refer them and spread the love! They will appreciate your word of mouth referral more than you know.

Start online:

The internet is full of amazing opportunities. You can easily start your business online through the creation of a website. Sites like Weebly, Wix, and even WordPress.com all are great platforms to begin on a budget as they all offer templates you can work off of with zero web design skills. With these, you’ll also need to purchase a domain name (AKA your business web address), a process they each walk you through when you sign up. When using WordPress, you will also need a hosting site, which is basically a home for your domain name. Weebly and Wix have theirs built into their platforms, but their customization is not as advanced as WordPress. Bluehost or GoDaddy.com are both examples of where you can find hosting sites. Again, you may want to reach out to a friend or use a consultation with a marketing company to help you get started with this particular process, as it can sometimes be complicated.

In addition to a website, you can now sell items on Facebook. If you do not want to upgrade your site to be secure enough to sell items (all websites need to have what is known as an SSL certificate when selling items or even collecting emails, which protects private information of site visitors), you can create an account at Shopify.com and connect it to your Facebook page or use Facebook as your store. You will need, however, a PayPal or Square account in order to move forward.

Starting online allows you to save on initial overhead costs (other than your website) on a brick-and-mortar. But, you can surely invest in a physical location after getting your feet wet. This all depends on whether your business would benefit on a physical address or if you can survive solely online.

Make it a side hustle and have supplementary income:

Starting your own business on a budget does not mean you have to wait until you are no longer at your full-time job to begin. You can start with it as a side hustle and continue to grow it until you are ready to be full-time. By all means, you can also make it your primary focus and help your financial situation with a supplementary income until you start seeing a profit in your business. House sitting, dog walking, and freelancing are all examples of easy ways to get this going. You could also use the money from your supplementary income to invest into your business if you needed the extra funding for a special project.

Grow through networking:

Networking is an especially cost-effective way to grow your business. No matter what industry you are in, everyone can benefit from networking. Check your local events calendar to see where opportunities may be for you to meet prospects. You can also utilize your existing connections or memberships to grow. For instance, if you have a gym membership, and you are starting a catering business, you can reach out to the gym manager or members who work at local businesses to see if they would be interested in your services.

All in all, know that starting your own business on a budget can be done. No matter what, though, it always takes consistency and a lot of work in order to make it happen.

Have you been dreaming of starting your own business or have you already? What tips would you add to the list? 

Sole Proprietorship or Single-Member LLC:

Sole Proprietorship or Single-member LLC

Which is Right for Your Business?

With the internet at your fingertips, going into business for yourself has never been easier. Whether you are a freelancer, a consultant, or an entrepreneur, your web presence introduces you to potential clients around the world. There are unlimited possibilities to expand your business and reach new markets. However, choosing a business model  can be overwhelming. There are many different options for your corporate structure. The most common choices are Sole Proprietorship or a Single-member LLC. Each one has its benefits and drawbacks, but here are a few questions to help guide your decision.

What are the Differences Between Sole Proprietorship and an LLC?

Sole Proprietorship is the most basic structure and requires minimal paperwork. Essentially, when you begin doing business, you are operating as the sole proprietor. There is no legal separation between you and your business. However, it requires you to separate your personal and business assets. You must maintain separate accounts for each.

Single-member LLCs are limited liability companies  that are owned and operated by a single person. The owner must file paperwork with the state where they plan to do business and comply with all local regulations. For tax purposes, they are considered ‘disregarded entities.’ However, LLCs are separate legal entities when it comes to questions of liability. This business structure protects the owner’s and the company’s assets from any claims or lawsuits brought against the other. It requires more time and paperwork to set up, but can protect you and the future of your company.

What are the Tax Advantages and Disadvantages?

Both models can  file with personal income taxes using Schedule C. You simply list your company’s income and expenses on your return. However, accurate bookkeeping is crucial. If you don’t stay on top of your records, it could make the filing process more complicated than it needs to be.

The major responsibility for a sole proprietor is the self-employment tax. You are responsible for both the employer’s and the employee’s share of FICA taxes which is 15.3%. The taxation rates are higher, although the employer share can be deducted as a business expense.

Single-member LLCs also have the option to file as a C Corporation. Depending on the owner’s income, paying the corporate taxation rates may be more advantageous. The laws relating to corporate taxation vary between states. Filing as a corporation could get you a larger return depending where you live. There are a number of factors to consider when choosing how to file, but owning an LLC gives you options.

How Does it Affect Liability?

The greatest advantage of forming a Single-member LLC is liability protection. Since a sole proprietor and the business are considered one entity, you are left vulnerable. Since the LLC is a separate legal entity, there is no personal liability for the owner. All of your private assets are shielded under the umbrella of the LLC. This means that your home, vehicle, and accounts cannot be seized in the case of indebtedness or bankruptcy. Although financial contributions to the Single-member LLC may be at risk, your personal assets are off limits.

This protection also works both ways. Your business assets are safeguarded against personal liabilities, debts, or bankruptcy. If you suffer personal misfortunes, the LLC will protect your business from personal creditors. Keep in mind this separation can’t be maintained if you ‘pierce the corporate veil.’

Should I Choose Sole Proprietorship or Single-member LLC?

Every company’s needs and situations vary over time. As your company grows, these needs evolve as well. Both structures have their advantages and disadvantages, but you’ll need to choose one. Sole Proprietorships are easy to form and dissolve in addition to offering pass-through taxation. While it does require more paperwork, a Single-member LLC provides liability protection and flexibility when filing taxes.

If your business is operating with little or no liability, sole proprietorship is probably your best option. However, if you plan to expand your business, incorporate other LLCs, or convert to an S corporation down the line, you should consider a Single-member LLC. Remember, these are only general suggestions to lead you in the right direction. Make time to sit down with your financial advisor to decide which structure is best for your business.

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