Hi Taylor: What’s the first step for becoming self-employed? I’m ready to turn my side hustle into a full-time gig and want to make sure I’m handling things in the right order. - Deborah
Hey Deborah: Congratulations on the transition! You’re about to enter an exciting phase of your life, and I’m glad you’re taking the time to make sure you do it right.
Each business is a little different, so the order of affairs can change from one business owner to the next. I’ll lay out three of the early tasks and you can figure out the order in which you approach them.
1. Decide on a business structure. When your freelance business becomes your primary source of income, you need to decide what type of company you’re actually running. Since it sounds like you’ve been doing the side hustle for a while, you likely have a sole proprietorship and get 1099’d for all your work. There’s no reason why you can’t continue with this business model, but it’s worth considering forming an LLC in order to better protect yourself in the long run. Some people avoid registering businesses because they don’t want to pay the annual fees, but those who are already receiving steady income are usually better off with a more detailed business structure.
2. Secure your name and brand. As you take your self-employment from part-time to full-time, you want to make sure everyone can find you and communication is seamless. This requires an identifiable business name and a website attached to that name. Depending on what you do, your website can be as complex or simple as you want, but that initial landing page has to exist for clients searching for information. And, since your preferred web address might already be taken, this is an opportunity for you to figure out what you’ll call your business and how that name fits with your overall brand. The earlier you make these decisions, the easier it will be to promote and attract new customers.
3. Figure out finances. You don’t want to wait until tax time to think about tracking your spending and distinguishing between business and personal expenses. You might not need a business checking account - and might not yet be able to open one anyway - but you do need a clear system for keeping everything in order. It’s easy to let all your spending merge together when you run a sole proprietorship, but a clear delineation between work and everyday expenses will make your life much easier.
You can probably tackle each item on this list concurrently, as they’re all relatively intertwined. Best of luck!
Disclosure: Information presented is for educational purposes only and is not an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. To submit a question to be answered in this column, please send it via email to Question@GoFarWithKovar.com, or via USPS to Taylor Kovar, 415 S 1st St, Suite 300, Lufkin, TX 75901.
