Disclaimer: I am not a lawyer or an accountant, this post is what I've learned from starting 3 of my own businesses, & helping others start theirs. Always check your state for state rules and regulations.
Anyone else scared to accidentally break the law?
Or maybe that's just me...
I had literally no idea what I was doing when I first started out being a VA. I was scared to accidentally break the law, and have an illegal business. This is part of what held me back for way too long.
This process largely depends on what state you live in, but look up what the guidelines are for the state you live in, and you'll find everything you need.
The easiest way to do this, is to go through a company that files business paperwork. (They will always try to upsell you, though, so don't let them charge you for things you don't actually need)
I recommend Inc File to help you with this. They don't charge additional fees, you'll pay just the state filing fee, and it's honestly the best!
I've done my research... So you don't have to.
Full disclosure, that's an affiliate link. I loved them so much I requested to be an affiliate since I was recommending them anyway!
What you actually need.
(but don't purchase anything until you've finished this article)
A business structure (Llc, S-corp, etc.)
Any permits that may be required by your state. (I live in VA and none are required)
A business Bank account
What you don't need to buy
Many of the state filing websites will try to get you to pay for an EIN... They are completely free, and takes less than 5 minutes to apply for.
DO NOT pay for this. Go right to the IRS site, and apply there.
A business bank account
You do need one, if you have an Llc, it's 100% necessary to have one. But you don't need to pay. Search small business banks. Look for ones that will give you rewards, and offer multiple accounts, so you can have savings and checking accounts.
Don't accept promises as a legal obligation.
Get a contract.
Never start work for someone without getting a contract. There are several CRMs you can use that will also make contracts and keep track of everything. I highly recommend using one of these, or purchasing a contract template.
Here are some things you should include in your contract:
Your pay rate
The project details
When payment is due
And what will happen if payment is late
How often you’ll be paid, and how.
Your office hours
The scope of work
Any deadlines if there are any
What you will allow in your business
How long they must give you notice if they want to terminate services
The only thing you have to do in life is pay taxes
And die... but that's not what we're talking about today.
There's nothing fun about the world of taxes, but we have no choice... sigh.
I'm definitely not a tax expert, and my advice will always be to talk to a CPA to get accurate information that is customized to you and your business. Taxes are different in every state, so giving any other advice is difficult to say.
But here are some things I recommend that will help you during tax season:
Keep track of all of your income. Every invoice should be accounted for.
If you consistently use the same system to invoice your clients, you'll have a much easier time keeping track of everything.
Keep track of all of your expenses as well. When I first started, I used a simple spreadsheet, that can be fine at first, but it's best to move to a system like Quickbooks as quickly as possible.
Sort your expenses into categories, so that when tax time comes, you've already done half the work. (You won't regret not having to do this all at once, learn from my mistake!)
Check to see if you should be paying estimated taxes. If you're married, and your partner has a W2 job, you may not need to be paying them, but it's always best to get an expert opinion.
Taxes can get very complicated, so consulting a CPA, Account, or bookkeeper is always the best options when working on them.
Check out the other parts to this post - This is Vol. 4