Dos And Don'ts For Setting Up Your Own Business

Being your own boss is a citation most salary workers dream of from time to time -- if only for the ability to choose when and how long your lunch break is. Jokes aside, there are pros and cons that come with being self-employed, and one of the biggest cons is that you probably have no idea where to start or what to do and not do. But if you're honestly interested in the benefits of owning your own business, there are a few dos and don'ts things to do in the beginning that you should probably know before jumping in with both feet.

DO:

• Figure out your legal structure. In order to be successful, you can't just rent office space and put a sign up on the wall -- you're going to need to figure out the legal structure of your business, since it'll affect everything from taxes to profits from your business later on. Generally speaking, setting up shop as a corporation means that you'll have to raise capital from any investors in your business and keep meticulous records, but your tax rate will go down; an LLC protects your personal bank account from the company's debts; and a plain old sole proprietorship lacks the fuss and formality of the other two but makes you personally responsible for your company's debts.
• Consider your start-up. As good and as needed as your services are, they won't get anywhere if you don't have any money to start out with. The old adage rings true that you have to spend money to make money, and exclusively using your own personal finances will, in all likelihood, simply send you into a whirlwind of debt. Loans and equity are generally the most common ways of financing your business, so look into them both to see which would be right for you.

DON'T:

• Skip analyses and business plans. As excited as you might be about your new product/service, it's a good idea to pull back and check your figures before doing anything else. Writing out a business plan that covers your profit and loss forecast and creating breakeven and cash flow analyses are good ideas to see exactly how viable your idea actually is, and where the weak spots that need to be patched up are.
• Forget to make a (unique!) name for yourself. Whatever your company does or does not do, it's going to need a name that suits its purpose and isn't already taken. This is easier said than done, however. Come up with a list of 20 or so names that would work, then go to work to make sure none of them already exist (both the Internet and your county clerk's office will be helpful here), checking especially for state and federal registered trademarks. Once you've crossed those names off the list, look at those that remain and, with the help of a few trusted associates and/or family and friends, choose the best.