How to Start a Business in 5 Steps

When Will and I first created Yottled, we were told to set up several things for our business.  It was difficult to understand, took weeks to get done, and was a barrier to us doing anything for our customers.  We were fortunate enough to have resources, money, and people to help us navigate these confusing concepts and ideas.  Not everyone is.  

Roughly 25% of households in the US are unbanked or underbanked according to a survey done by the FDIC in 2017.  Those people either do not have a bank account or have one but need to use expensive services like payday loans to survive.  

Roughly 25% of households in the US are unbanked or underbanked

FDIC Survey from 2017

Will and I are not part of that 25%.  We are banked and privileged to get help when we need it.  We had an attorney to walk us through exactly what we needed for our business.  If making money on your own seems confusing or hard, it’s because it is.  If you’re part of the unbanked, underbanked, or need additional resources, you may find this article helpful.

A few things about Will and me:

According to the IRS, sole proprietors represent 73% of businesses that exist in the US.

IRS

Ready to get started?

  1. You need a bank account
    1. If you have a bank account, you’re rocking and rolling.  You can even use a personal bank account for your business if you are operating as a “Sole Proprietorship” or “Doing Business As” or DBA (more on this later).
    2. If you don’t have a bank account, NerdWallet has a ton of great advice on opening a bank account online.  Check out their resources here.
  2. You may need to push some paper
    1. Tl;dr – You may need to do some paperwork.  Truth be told, it sucks.  We hope somehow our learnings can be of some help to you.  The cheapest way is with a site called LegalZoom.
    2. Almost all of our trainers fall into one of the following 3 business types.  This is not encompassing of business types, but it’s the main types that our customers have used:
      1. Sole proprietorship – tldr – You use your name and social security number as your business.  You mix your personal and business finances.  You will likely need to get a business license with the state and may need to get a permit depending on the business.
        1. It’s a great way to operate for most people.  According to the IRS, sole proprietors represent 73% of businesses that exist in the US.  It’s the most common type of business operating model by far.  You will need to keep track of what is taxable vs. not taxable from an income standpoint (more on this later).  Luckily, there are electronic tools to help!
        2. With sole proprietorship, you will need to get a business license and may need to file for a permit depending on the work you’re doing.  Be sure to check with your state to understand what permits are needed.
      2. Doing business as (DBA) – tldr – It’s basically the same thing as a sole proprietorship but you have decided a business name instead of your name (eg. Yottled instead of Trevor Hough).  Because of this, states require you to file some paperwork and charge you for it so they know Yottled is the same thing as Trevor Hough…and they can get their taxes.
      3. LLC – tldr – A complete and separate company is made.  There are owners and members of the company.  It costs money and you will need to file paperwork with the state.
        1. On average, it costs $1000 to create and found an LLC.  This is mainly due to attorney and state filings.  
        2. The largest advantage to an LLC is the separation of personal and business finances.
  3. You will be confused
    1. Confused yet?  Let’s recap.  So far you need:
      1. A bank account.
      2. Rolling with a sole proprietorship?  Some states require permits and a license so check with the state.
      3. Keep track of your business spending and income for taxes.
      4. We’re almost done…
  4. Get paid electronically
    1. Let’s assume you’re going to set up a sole proprietorship.
    2. Getting paid electronically helps keep track of business expenses and individual items.  This helps when it comes to tax time.
    3. PayPal and Stripe are two platforms that make this easy. 
    4. If you already have a PayPal account, it takes less than 60 seconds to turn your account into a business account.
      1. What exactly is a business account with PayPal or Stripe?
        1. It’s a way for 3rd parties like PayPal or Stripe to register payment as taxable.
    5. Now you can get paid electronically and easily keep track of your taxable income!
      1. PayPal and Stripe do this automatically for you.  No fancy footwork for you.  People pay you, you run a report during tax time.
  5. Done! – Let’s recap all of the quick steps so it doesn’t take you weeks!
    1. So far, you have used your existing bank account.
    2. You have used your name and social security number for a sole proprietorship.
    3. Get licensed and get permits.  Check with your local state to see what they are.
    4. Convert your PayPal account to a business account.
    5. Get customers.

If any of this is confusing or you need help along the way, we are here to help you.  Our goal is to enable anyone to be successful.  If you’re unbanked, underbanked, or need additional resources, we want to help you.  Reach out to us and we’ll help you however we can.

We hope you love Yottled and we make a positive impact on your life.  If you have any questions, we got something wrong, or you just want to say hey, send us a note to [email protected].

~Trevor and Will

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