Have you found a side hustle that’s earning you some extra cash, but want to take it to the next level? You may be considering starting a legitimate business.
But here’s the problem: If you’ve never started your own company, the process can be a bit confusing and overwhelming. Not to mention, it can also be time-consuming.
Luckily, it’s not that difficult to get up and running quickly if you know the proper steps — you could even be in business in 30 days.
Here’s how to start a business in four easy steps and set it on the path to success.
How to start a business in a month
Deborah Sweeney, CEO of MyCorporation, an online legal filing service for entrepreneurs and companies, made a business out of starting businesses.
“It’s not that hard or costly to turn a small side project into a more substantial business,” Sweeney said. “You just need to know where to focus your time and money to streamline the process.”
Below are the important steps Sweeney believes you should take if you want to start your own business in a month.
1. Research Your Competition
“The first step is thinking about your branding and then do the research,” said Sweeney. “Once you know how you want to market your business, what it will look like, and what the name will be, then you can find what else is out there in terms of competition.”
Research online to see if there are trademarks and business names already established that would conflict with yours. And take the time do research beyond what Google has to offer.
“Look in places like the United States Patent and Trademark Office’s (USPTO) trademark database to see if someone has already been registered or applied for something similar,” Sweeney said.
In this database, you can see if any existing marks are similar to yours and used on related products or for related services. You can search for patents, trademarked words, and trademarked images. If something pops up that seems like it could be a conflict, check the status to see if the application or registration is still “live.” Any “dead” mark cannot be used to block a new application.
“The last thing you want is to set up a business only to find out that someone else has the same name or a trademark and you’re infringing on them,” Sweeney said.
According to the legal definition, trademark infringement “is the unauthorized use of a trademark or service mark (or a substantially similar mark) on competing or related goods and services.”
And when one business sues another for trademark infringement, the success of the lawsuit is dependent on “whether the defendant’s use causes a likelihood of confusion in the average consumer.” Essentially, two businesses can have similar names and logos, so long as the consumer is not confused.
For example, if someone opened a new bank and wanted to call it “Chase Bank,” it would obviously confuse customers and be considered an infringement. But, if a dog daycare center wanted to open with the name “Chase,” it’s likely ok since it’s a completely different type of business.
You can always consult a trademark attorney if you have questions.
2. Create a business plan
No matter the size of your company, having a business plan is important because it keeps you on track. “If you’re going the LLC [limited liability corporation] or S Corp [small business corporation] route, you’re going to need a business plan to show potential investors,” said Sweeney. “But even if you’re not, it’s a good practice when learning how to start a business.”
- Where do we market?
- Where do we get revenue from?
- Who are the base consumers?
- Where are your growth opportunities?
- How will you market the business? How are you going to keep a record of your profit and losses?
- What people do you want involved?
Take those answers and write a plan that shows how you’re going to achieve your business goals in the next six months, year, and five years. For every answer, you should have an action item associated with it.
Sweeney also recommended starting with a basic financial balance sheet as part of your business plan to understand where you are today and where you want to be.
“It’s critically important for businesses to not just have where they are today or where they have this dream of being,” she said. “But, very strategically where they anticipate being at the end of this calendar year, next calendar year and maybe one year from there. This keeps you on track.”
3. Apply for a business license
Once you’ve made sure that there are no conflicts with your business idea, the next step is to make your idea legitimate: Apply for a business license. (This isn’t difficult, considering there are 28.8 million small businesses in the United States, according to the U.S. Small Business Administration.)
“The easiest thing to do if you’re just taking a small side gig and wanting to make it a legitimate business is to file for a business license as a DBA (doing business as),” Sweeney said.
This process varies by location. In California, for example, where Sweeney’s business is, you file with the county. So, if you’re living in Los Angeles County, you have to go to the county’s business registrar with your paperwork for a DBA license, file it, and then publish the business name statement in a newspaper that operates in Los Angeles County.
“Many people don’t have the time to go in person, which is why online services are the perfect solution if you’re just getting started,” Sweeney explained. “They charge about $69 (compared to $30 to $50 if you do it yourself) to help you get this paperwork filed depending on your location.”
Using a service and paying about $40 more will help you get your business up and running in that 30-day period. You’ll likely make several investments in your business over the years; this is a minor one that can be a tremendous help in the initial set-up phase.
Why is getting a business license is so important? It’s what you’ll need to set up:
- An Employer Identification Number (EIN); essentially a social security number for a business.
- A business bank account.
- A business credit card.
“It looks more legitimate that your customers are paying a business rather than your personal account,” says Sweeney. “And businesses can write off business-related expenses such as office space, marketing, business travel, and employee-related expenses.”
While you can write off business expenses irrespective of having a business license (if you’re a freelance writer, for example), there are some benefits to filing separately from your personal taxes. You are able to deduct certain business expenses that you might not be able to deduct on your personal taxes.
“A business owner can also deduct corporate start-up expenses such as the cost of forming a corporation and obtaining necessary business licenses, which can equal savings,” said Sweeney.
However, If you’re setting up an LLC or S Corporation, a DBA license isn’t necessary. You would set up an LLC if you want an unlimited number of members, whereas S Corps can have no more than 100 shareholders (owners). However, both protect owners from being personally responsible for business debts and liabilities.
“Basically, setting up a corporation is a similar process as a DBA with different paperwork and fees that cost around $200 for an LLC or S Corp, versus the $30 to $40,” said Sweeney. “It’s really only necessary if you’re looking for investors or have a lot of personal assets you want to protect.”
4. Set up your finances
You’ve got your business license and your business plan, and you’re ready to start making money. Before that first dollar even comes in, set up how you’re going to track your profits and expenses.
“Managing your basic numbers is critical to understanding how your business is actually doing,” said Sweeney. “Do not try to commingle the business funds with your personal.”
Sweeney suggested using a simple system like Quickbooks from the beginning. Prices range from $5 to $35 a month.
“You need to start and keep a process in place where you calculate your income, you manage your expenses, and know how much you’re willing to spend in expenses monthly,” she said.
The accounting software can take care of the day-to-day financials but Sweeney recommended finding an accountant who understands business taxes. “Meet with them either semi-annually or on a quarterly basis to find out what you owe.”
Now it’s time to market your business
You’ve got all the basics of your business set up, but what happens after that?
“Once you have all of the licenses and bank accounts in place, you need to get your business out there,” said Sweeney. “This requires spending time beyond the initial steps coming up with branding concepts, creating a website, and getting any materials you may need printed to promote your company.”
With platforms such as Squarespace and Wix, building a website is easy and inexpensive. Sites like these already have professionally designed templates and DIY customizations. You can have a beautifully designed site — even with online shopping — in just a few days.
You want to be careful with the image you’re putting out into the world, advised Sweeney, because that’s what potential clients or even investors will be looking at down the line.
“Make sure you invest the time in a marketing plan,” she said. “It will be instrumental in the success of your business.”
If you follow these steps, you could be in business within a month. It’s important not to take on too much, which is why Sweeney boiled down the process into a manageable to-do list.
With a little time and money, you could turn your side hustle into a legitimate business.