Starting a home business is something that I have dreamed of for at least the past 10 years. Unfortunately, I never took any action until just recently as an entrepreneur. I finally got up the nerve and decided that setting up a company couldn’t be that hard.
I just recently completed setting up my first official business – a Limited Liability Company (LLC)! The process was fairly simple and I am excited about the future possibilities it can bring my family. Here are some of my notes I would like to share about starting a home business from my personal experience.
Setting up the LLC
One of the most important choices to make when starting a home business is the type of structure you would like to form. A couple of options include – Sole Proprietorship’s, Partnerships, and the popular Limited Liability Company (LLC). There are several advantages and disadvantages to each type of structure, so make sure you find the one that is best for you.
I chose to form my company as an LLC for several reasons, most importantly to protect my assets. A Limited Liability Company can protect your personal assets like that of a Corporation without all the hassles. If you are interested in starting a home business, be sure to research each structure and pick the one that is best for you.
Setting up an LLC can be handled in a couple different ways. You could fill out all the paperwork yourself or hire another entity to submit your information on your behalf. After reading How to Start a Company in 30 Minutes, I decided to take the easier route and hire LegalZoom to do the work. The process was simple to complete and in less than 30 days I had a real live LLC!
Here are a few of the highlights of starting a home business that I would like to share from my personal experience.
- Entity Name – A Limited Liability Company name must end with the words “LLC”, “L.L.C.”, or “Limited Liability Company”. My first choice in business name wasn’t available, so my second choice was selected – Schroeder Ventures LLC.
- Address – I ended up going with my home address because I couldn’t decide which UPS Store I wanted to open up an account with. I can amend my operating agreement in the future for about $10 when I decide on an official address.
- Registered Agent – Based on a recent affiliate tax imposed by my state, I strongly considered forming my business elsewhere. The one issue I had with that is I would have needed a registered agent assigned to act upon behalf of the LLC. I ended up forming the entity in my home state.
- Members & Officers – I strongly considered starting a home business with myself as the only member and officer, which would have made the taxes a bit easier to complete. I ended up adding my wife as well to ensure that she is taken care of if something happens to me.
- Fiscal Year – I choose to end my company’s fiscal year on December 31st, which is usually the most popular choice. This was something that I had not even really thought about prior to starting a home business.
Next Steps in Starting a Home Business
Now that Schroeder Ventures LLC is an official entity, what are my next steps? While the company only consists of my wife and I, there are several things I still need to plan out and take care of.
Here is a list of action items for the next week that I hope to complete.
- Checking Account – It is critical that I separate personal accounts from the business, so I need a checking account. Once this is setup, I will deposit $500 into the account as the initial investment.
- Credit Card – Another important account that is required to do business. I need a company credit card in order to launch my online store (setting up an online store is one of my 2010 SMART Goals).
- Apply Resale License – Turns out I still need a resale license in my state, even after the LLC has been formed. I need this license, especially to open an account with a vendor to begin reselling products for my online store.
- Change Business Name – Not completely understanding the steps of starting a home business, I applied for my Tax ID a few weeks before the LLC was formed. Unfortunately, the business names are not the same between the LLC and the Tax ID. I need to fix this.
- Changing Tax Information – I need to begin switching over my Tax ID in my affiliate accounts from my SSN to the new Tax ID. Unfortunately, eHow will not allow you to change tax information, so I need to figure out what to do about this one!
- Completed Documentation – Even though the LLC has two members, I need to finish signing the operating agreement and completing the membership certificates provided by LegalZoom.
- Secretary of State – The secretary of state where I am starting a home business has a 30+ page document about forming an LLC that I need to review. Even though the company is official, I need to confirm I am not missing anything.
Final Thoughts
As I work through starting a home business, I plan to share my experience in as much detail as I can. These weekly updates will not only help keep me on track, but may also help motivate others to start a business. Feel free to comment and tell me what I am doing wrong or let me know what experiences you have had in forming your own business.
Related posts:
- 5 Lessons I Learned from Flag Football That can Be Used in Starting a Home Business
- 4 Things to Consider When Setting Up Your Business
- Building Your Home Business Client Base
- Green Business – A Passive Income Opportunity?
- Tips on How to Open a Small Business Checking Account
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Wow,
This has been something I’ve been thinking about for a while, but put it in the backburner since I’m employed full-time and will be moving from DE to CA in June.
Did the whole process fill you with renewed energy? Hope so. You’re far in this game than I am, but have you explored what type of online store you’ll be setting up?
@Moon – Absolutely. I am full of energy and extra motivation to start making things happen. It is definitely a learning curve and I am using this site to document what has gone well and what hasn’t in the whole process.