For many individuals, side gigs are more than additional income. Whether it’s expanding a freelance writing portfolio or working in graphic design, side gigs are serious business. These part-time roles have the ability to expand into becoming full-time jobs. That potential is often associated with a bit of hesitation. It’s exciting to think about starting a business and becoming your own boss, but taking action can be a scary step forward. How do you successfully take the side gig you love and make it a full-time small business?
While there’s no real set of guidelines that ensure you’re doing everything the “right” way, there are certain key steps that have the potential to greatly assist with the process. Listen up, new to the world entrepreneurs! If you’re prepping to make your side gig your full-time job, consider accomplishing the following tasks first.
1. Write a detailed business plan
A business plan is the blueprint to small business success. However, it’s often surprising how many entrepreneurs gloss over it or try to avoid creating one. Most business plans tend to be fairly long (30-40 pages), require a lot of details and are time-consuming to put together.
A traditional business plan generally contains, at a minimum, detailed coverage for the following areas. Let’s briefly sum up each one.
· Executive Summary. Here, you’ll talk about yourself, the business, what it does and its industry, where it’s located, why it matters to your customers, and how it plans to make money.
· Industry Analysis. Who is your competition? This is where details about competitors are kept, both direct and indirect.
· Market Analysis. Who are your customers and audience? Outline what your key demographics look like and plans to reach and retain them.
· Organization and Management. If you’re the only person running the show, this is the perfect place to add your biography. Any and all business partners or employees should have their information included here.
· Financial Projections. This section covers cash flow, profits and losses (usually projected), a break-even analysis, and expenses budget.
· Financing Request. Need capital for your business? Your financing request is designated to ask investors for business funds and to detail what you plan to do with that money.
· Appendix. This section includes important odds and ends, like trademark registrations and letters of incorporation, that would not have fit into the rest of the document.
The best news about writing a business plan is that these details do not need to stay the same the entire time you’re in business. It’s encouraged to revisit the document and make edits as needed!
2. Incorporate the business
Incorporating or forming an LLC is a huge leap forward for your business. Once you incorporate, you’re able to establish credibility and save money on taxes.
While I myself can’t tell you which entity type is the “perfect” one for your business, I can highlight some of the benefits that come with three of the primary legal structures. A sole proprietorship, for example, is fairly affordable and allows its owner to be the boss (hence the word “sole” in the name).
Limited liability companies (LLCs) provide their owners with a certain level of liability protection. This means your personal and professional assets are generally separate from each other. Should you be served with lawsuit papers, for whatever reason, the LLC designation generally helps keep your personal assets from being negatively impacted. Entrepreneurs who decide to incorporate as a corporation receive the same liability protection benefits as well. However, a corporation is structured a bit more strictly than its flexible LLC counterpart. There are required meetings for members to attend, minutes to take, and shares that may be issued.
3. File for an EIN
More often than not, having an employer identification number (EIN) is identified with hiring employees. Many individuals planning to turn their side business into a full-time business may not be ready to think that far out yet.
There are plenty of benefits that come with obtaining an EIN in the near future. This number is a federal identifier issued to your business by the IRS. It is a federal tax ID that identifies employer tax accounts. An EIN may be used in lieu of your social security number (SSN) to identify your business entity on important documents.
An EIN is less sensitive than an SSN. However, that doesn’t mean you should start adding it in all of your emails or writing it on documents left out in public. These numbers protect your personal information, so it’s important that they are both equally protected when used for your business.
4. Register your trademark
There is a high likelihood that your small business will come with something unique. It could be its name, logo, slogan, tagline, or even a brand mascot. Original phrases or designs associated with your business must be registered as a trademark.
What happens if your ideas aren’t trademarked? This leaves the door wide open for a copycat business to take your ideas and pass them off as their own. As a business owner, you would be helpless to defend the business because you didn’t file for or have an existing trademark application.
Rather than lose your brilliant thoughts, you should consider conducting a name search to see if your mark is available. If you find out it’s available, you can file to trademark the original assets. This will help keep any potential plagiarism at bay. It can also provide great peace of mind that the brand you developed, from side gig to full-time role, has been protected since day one.
Deborah Sweeney is the CEO of MyCorporation.com which provides online legal filing services for entrepreneurs and businesses, startup bundles that include corporation and LLC formation, registered agent services, DBAs, and trademark and copyright filing services. You can find MyCorporation on Twitter at @MyCorporation.
Please note that this blog article is not intended to address the specific circumstances of any particular individual or entity and does not constitute an endorsement of any entity or its products or services. This content represents the views of the author, and does not necessarily represent the views or professional advice of KPMG LLP. Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities. KPMG LLP does not provide legal services. KPMG LLP personnel must obtain written permission from the firm to engage in a side business.