The Bravohood

Have been pretty sparse on here as I've been in an awesome relationship for just over a year now but have tried to contribute where I can. That relationship would not be possible if it hadn't been for our community here and a lil life changing trip to PX. So thank you to everyone here.

What I would like to do is start a discussion about starting a small business and entrepreneurship in general. I know there are a few of you here that have started your own businesses and sharing your experiences, knowledge, and lessons learned with everyone could be very beneficial.



I'm in the very early stages of starting my own business. So far I've got my product on hand, target audience figured out, and my first paying client and a second client lined up. Cashing that first check alone was pretty exciting for me as I've never done anything like this.

A bit more about my business...
After quite a bit of reading and emailing and more reading I've started importing a product from China. It costs me $400 to get it to the states and I'm looking at a gross of just over $1100 so roughly a net of $700 per shipment. Not to shabby. Obviously cant live on that but it would definitely be a very nice boost to my income depending how often I can sell off the entire product.

I'm more then willing to expand on this and put up some links for others to check out if there is interest.

My main questions at the moment regards the legal stuff I need to do.

For example I know I need to register my business with the state and from what I've researched getting it put under an LLC is also a good idea as that protects me personally if anything goes wrong.

I'm going to assume this varies a bit state to state but is there any other general stuff I should look into regarding licenses or tax stuff? Wheres a good place to look into that?

Probably want to get a separate business bank account setup. Are these pretty generic between different banks or do some offer better perks then others?

1.) Not all states require a business registration. If you act as a sole proprietor and you operate a business that doesn't require sales tax, then you pretty much are in business as soon as you say you are. If you are forming an entity like an LLC and registering a business name, then that's different.

2.) At this stage in the game, you can absolutely get by without forming an LLC. Think about what an LLC stands for. Limited Liability Corporation. If the size of your potential liability is so low (a few thousand dollars), it doesn't make much sense to form an LLC. When the size of your potential liability is great enough to disrupt your life, then an LLC makes more sense.

3.) If you are doing small time business as a sole proprietor, you can get by fine without a separate bank account.

4.) I don't know what you are selling but you probably need to be charging sales tax. Your state probably has a website with sales tax info.

5.) If you grow your business a little more, get liability insurance. It's one of the cheapest insurances to buy and it will cover you for a lot of liabilities. Also ask your insurance agent what other kinds of insurance could protect your business. Insurance is protection, don't skimp on it.

I could write pages and pages more. But I suggest you ask questions that I can help you with instead of me just writing aimlessly. lol. Happy to help!

Cinema covered it all. I just want to add a few things that I noticed many new entrepreneurs do not do when starting a business.

Have you written up a business plan yet? It should have been the first thing to do prior to starting your business and pretty time consuming, but it's freaking beneficial as hell.

Since you mentioned you have a target audience, I assume that you've already done extensive market research correct?

When your business begins to flourish you'll have to figure out customer acquisition cost(s) and how to reduce them.

I saw you already looked into importing from foreign countries, is china the cheapest and most reliable option for you? How can you reduce your costs from $400 down to $300 or less?(Most likeliest option will be a larger bulk order to spread costs out)

How are you going to use the net profit to build your business?

What differentiates you from your competitor(s)?

These are just a few questions I believe businesses, even new ones, should prepare themselves to face.

Cinema's points all sound legit, but I think the best thing you can do is get a local business attorney. It may seem like a pretty hefty investment but it can save you a ton of cash and hassle later.

.

Jackfrost wrote:So you guys are advising he spend money from his business that he hasn't accumulated yet on insurance to prevent something bad from happening and on an attorney to advise him how to handle bad things that may happen?


Open the bank account for your business so you could track your expenses and income separately.

Once you open the LLC you will also have to start paying taxes on your income - so the guys are right in holding off on these until you absolutely need them.

But you will need them....

Liability insurance is about $100-200 a year. Not much of an investment for a lot of protection.

Also - You should be paying income tax on any money you are making. Don't cheat, you'll regret it later.
You can easily pay income tax as a sole proprietor using your normal bank account without any issues. I know, I've been doing it for 11 years!

When I was 17 I formed an llc for my pesticide business. I think it cost me about $150. One of the guys in my church had started a few businesses and I took him out to lunch to pick his brain. He gave me a ton of good advice and gave me a copy of one of his llc agreements. I just had to change the names and the business description in the doc and register it with the state and I was set. Then once you have one llc save it, and then your next business just modify it a little and then you're good to go again.

I'm not sure what you're selling, but if for some crazy reason you get sued and you don't have an llc or separate bank accounts they can go after all your assets. Where as if you take that extra step to protect yourself then usually all they can get is your business, and not your car, house, collection of Pokemon cards or whatever.

What state are you in?

I own a business here in California, that also involves importing and exporting from Asia.

My advice would be to keep things as simple as possible early on. I've seen so many peers try to start businesses and worry about taxes, regulation, permits, licenses etc. before they've even made a profit.

In my first few years of business, where I didn't make much money, all I did was file a schedule C with the IRS at the end of the year.

If you're in CA also, I could probably help you out with a lot of specifics in regards to legalities. Just ask.