How to turn your hobby into a small business Hosted by: Brian Cook & The Office of Financial...
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Transcript of How to turn your hobby into a small business Hosted by: Brian Cook & The Office of Financial...
How to turn your hobby into a small business
Hosted by: Brian Cook & The Office of Financial Advising
Objectives
•What kind of hobbies are marketable?•Taking the “step” from hobby to business.
• Valuating yourself• Formulating a goal• Developing a business model/strategy
•How to become “legit” checklist.•Q & A
Marketable Hobbies• Skill
• Artistic, Musical, or Anything that requires training
• Craft• Sewing, Building, Cooking
• Expensive• Horseback riding or Golf
• Time Sensitive• Collecting or Gardening
How do you know when it’s time to take
“the step” from hobby to business?
Taking “The Step” Pt. 1
Develop A Goal•What do you want this “business” to become▫Some extra cash▫A good side business▫Potentially something bigger if it works out▫Your career
Taking “The Step” Pt. 2
Valuate yourself/product/service•What do similar people charge (market value)•How would you rate or compare your ability?•Consider “selling” to friends and family first to get a baseline
**Tip: Establish if and what your friends and family “discount” will be
upfront**
Taking “The Step” Pt. 3
Develop A Strategy To Reach Your Goal (This is also known as your Business Plan)•Start ANSWERING these questions:
▫What do you already have vs what do you need?▫Does a market already exist vs creating your own?▫Ecommerce vs traditional business?▫Do you need funding?▫Debt vs Equity?
Now that you’re taking“The Step”
Keep from falling on you @$$ by…
BECOMING…
Becoming Legit Checklist•Step 1:
•Check with Secretary of State to determine if selected name is available
•Optional: Get a DBA (Doing Business As)•Step 2:
•File Articles of Association for LLC (Limited Liability Company) with Secretary of State
•$350.00 Fee
Becoming Legit Checklist•Step 3:
•Adopt a company agreement•Serves as By-Laws•Governs how the entity will be
managed•Conditions for transfer of
ownership•Directions for how the entity will
be dissolved if needed
Becoming Legit Checklist•Step 4:
•Apply for Employer Identification Number (EIN) with the IRS
THIS WILL DETERMINE HOW THE ENTITY IS TAXED
Type of Entity How it’s Taxed
Sole Proprietorship LLC is “disregarded entity” and files no return. All income reported on single owner’s tax return.
Partnership LLP files a partnership return and all income/losses will be reported on a separate schedule of each individual owner’s return.
S Corp Pays taxes just like a partnership.
C Corp Separate entity for tax purposes. Files and pays its own tax return.
Becoming Legit Checklist•Step 5:
•Open a new, separate business bank account
•This cannot be done until you have an EIN
The account should only be used for business purposes
•Step 6:•Transfer assets to your newly formed
LLC•Cash for operating capital•Assets through a bill of sale
BIG Little Things that will
MAKE or BREAK you
InsuranceProtect yourself and your assets
If you are using any personal assets for a commercial purpose then you will not
be covered under your homeowners insurance
You need to purchase a Commercial P & C (Property and Casualty, better
known as liability) Insurance Policy. Your business will be the policy holder.
Employees and Workers CompIf you “hire” help then it is important to distinguish
them between an employee vs and independent contractor
Employee Independent Contractor
• Management has lots of control over daily routines and tasks
• Paid on employer’s terms• May receive benefits• Stated as employee in contract
• Management has very little control over daily routines and task
• Paid on contractor’s terms• Is not a spokesperson for the firm• Contracted as an independent
Contractor
**You can hire independent contractors as needed very easily**
If you hire someone who falls under the “employee” category, then you must register for workers
compensation and begin paying workers compensation and social security tax for each employee you hire.
Taxes**There is no minimum amount you have to make before paying taxes. Every dollar of
income you make should be reflected on your tax return**
• Keep accurate records, both income and expenses▫ Use book keeping software such as Quickbooks▫ Keep your receipts for purchases▫ Create a receipts for your customers (1 copy for
them and 1 for you)• If you have kept accurate records, filing your own
taxes shouldn’t be too hard!!!▫ You can use TurboTax to file yourself▫ Or you can go to a professional CPA for a fee
Resources
•SFA Student Financial Advisors▫Individual 1-on-1 counseling
⚫Budgets⚫Financial Advising, etc.
▫Groups/ Organizations⚫Workshops ⚫Presentations ⚫Budgeting and Financial Counseling
Questions?Concerns? Comments
?
Contact Information
*www.sfastudentfinancialadvisors.wordpress.com*
Social Media: Facebook – SFA Student Financial
AdvisorsPinterest – Student Fin AdvTwitter - @StudentFinAdv
OR VISIT OUR OFFICE IN BUSI 162