1.888.226.8499| www.bothpro.com

ESTABLISHING YOUR OWN COMPANY

IMPORTANT CONSIDERATIONS FOR THE SOLOPRENEUR

2www.bothpro.com

Establishing your own Company

Guidelines for the solopreneur

Purpose of the company:

Operate as a Workforce of One (i.e. Freelancer,

Consultant, Sole Practitioner, Independent Contractor)

Key aspects of establishing & running your own

company

How to be in business for yourself, not by yourself

3www.bothpro.com

Becoming a Company of One

LLC IS THE PREFERRED BUSINESS STRUCTURE

Designed to provide the limited liability features of a

corporation and the tax efficiencies and operational

flexibility of a partnership

Easy to maintain. Annual meetings and minutes, not

required, although recommended

Pass-through taxation. File a Schedule C at year-end

Professional status, operating under a secure legal structure

If maintained correctly, LLC reflects compliance

4www.bothpro.com

S Corp LLC

Limits owner liability for business debts & obligations X X

Company name protected by registration process X X

Company can have an unlimited term of existence X X

No limit to the number of owners X

No citizenship requirements for owners X

May be owned by another business, rather than individuals X

May issue shares of stock to attract investors X

Owners can report business profit and loss on their personal tax returns X X

Not required to hold annual meetings or record meeting minutes X

Benefits of an LLC

5www.bothpro.com

Single Member LLC Tax Advantages

Pass-through taxation

Deductions

Common Deductions for

Businesses

o Start-up costs

o Vehicle

o Home office

o Retirement savings

o Professional fees

o Office equipment & supplies

o Business Travel

o Health insurance premiums

o Marketing Costs

6www.bothpro.com

Legal Considerations

Operating Agreement

Most important document next to Articles of Organization

capital

profits

voting interests

operating rules

state requirements

B2B Relationships

Vendor/Service Agreements

Statements of Work (“S.O.W.”)

Compliance

7www.bothpro.com

Business Banking & Bookkeeping

Separate entity = separate bank account

Set up business bank account for your LLC

Choosing the right bank (local, internet, credit union)

LLC expenses must be kept separate from personal expenses

If personal funds are used for business expenses, LLC can

and should reimburse

If LLC funds are used for personal expenses, LLC should be

reimbursed

8www.bothpro.com

Accurate Bookkeeping Accurate bookkeeping is a must

IRS can impose fines, penalties, and disallow deductions if an

audit confirms poor records or significant mistakes

Should be part of your everyday business routine

Consider outsourcing More time to focus on clients

9www.bothpro.com

Accurate Bookkeeping

Monitor the progress of your business

Prepare your financial statements

Income Statement

Balance Sheet

Identify source of receipts

Keep track of deductible expenses

Prepare your tax returns

Support items reported on tax returns

Source: www.irs.gov

What to Keep?

o sales slips

o paid bills, invoices

o receipts

o deposit slips

o canceled checks

10www.bothpro.com

Tax Responsibilities

Schedule C

Quarterly Estimated Taxes

o April 15th

o June 15th

o September 15th

o January 15th

11www.bothpro.com

IT Considerations

What are your requirements?

Branding your business

Select a domain name and register it

Add an email hosting plan

you@gmail.com is ok, but

you@yourdomainname.com is better

Web Hosting plan

Consider paying a Web Designer for

simple 4-5 page site

About, Services, Testimonials, Contact

Do it yourself vs. hiring

12www.bothpro.com

IT ConsiderationsWhat tools do you need (software)?

Cost Considerations

Office, Project, Point of Sale solution, other software

Free (Google Apps, ZoHo) vs. Purchase

Software as a Service vs. Local Copies

Data backup, client files, company docs,

bookkeeping

USB drives are good, but offsite is better

Consider IT hosting services for applications and

data

Prepare for Murphy

13www.bothpro.com

IT Considerations

What type of support do you need?

Small “techie” support businesses got their start in large

organizations

Do you have specialized requirements?

Find IT support that specializes in helping companies like yours

Check references of satisfied customers

What about SLAs? Do you need them?

Vendor size, bigger is not always better

Plenty of help out there. Don’t go it alone

14www.bothpro.com

Liability Insurance

General Liability Insurance

o Coverage for assets and business

o Personal injury, libel and slander

Professional Liability Insurance

o Coverage for lawsuits against the individual

o Malpractice, Errors and Omissions Insurance

15www.bothpro.com

Health Insurance

Myth: Group plans offer discounts

Market for individually underwritten plans is robust

Let your own LLC establish permanent and tailored plans

Indemnity/Defined Benefit Plans can provide excellent first tier

Premiums are tax deductible through the LLC

16www.bothpro.com

Retirement

How do you enhance your retirement savings?

ROTH IRA vs Traditional IRA

Solo 401(k)

17www.bothpro.com

Running Your Back Office

All of this can be described as back office administration and

operational hassles

Most likely it is not what you do best

Referred to as your Back Of The House

You make money by focusing on your Front of the House

Be careful. Running your back office is time consuming, what

is the opportunity cost?

Get professional help; don’t try and do all yourself

Make sure you know what you don’t know and that you know

your options

18www.bothpro.com

The Ultimate Solution

Let BOTH:

Establish your LLC, with a hosted IT platform & website, online

bank account and health & retirement benefits

Provide your own Personal Advisor who will handle your LLC’s

billing, collections, bookkeeping, taxes and assist you with all

your day-to-day admin hassles and operations

1.888.226.8499| www.bothpro.com

BECOMING A COMPANY OF ONE

TURNKEY BUSINESS ESTABLISHMENT. 1-STOP BACK OFFICE SUPPORT.

INTRODUCING BOTH. INDEPENDENCE JUST GOT EASIER