It happens to me all the time.
And I’m sure it happens to you as well.
You sit down, relax and start to think…
You think about everything and anything.
And then, something special happens; you have an idea. A brilliant one. An idea that is good enough to help you make some money. It is born from one of your passions, from work, from something you have heard during the day.
After an ecstatic moment where you build your empire, make money and retire 5 years later, you brutally realize that this is all happening in your mind and nothing is close to being done in real life. You have no company, no business plan, no funding. Many of you asked me how to setup a business, you want me to talk about the technical side of it. So here we go; I’m going to give you the ultimate checklist to use prior to starting a business. Point by point, all the things you need to take care of before making your very first business move. In fact, setting up the structure is even more important than your idea. You are not only setting up a corporation, you are setting up an idea launching platform. After these steps, you will be able to launch any idea using the very same platform.
In order to show you how I made mine, all examples cited in this article are coming from my own experience.
The Only Check List You Need Prior To Starting Your Business
#1 Write down your business idea on paper
This include far more than “running a financial blog”. To be honest, this was one of the first mistakes I made. ‘Cause I did start with “running a financial blog” as a business idea. I should have dug up and wrote what all my ideas were concerning running a financial blog:
– Do I want only one blog?
– Will it be disclosing my personal finances or will I be talking finance in general?
– Do I need funding?
– Do I need a partner?
– Once I start writing, what will the next step be? What will TFB become in 5 years? What are the long term goals for this project?
– How am I going to make money? How long will it take before I get my first check?
What I wrote in M-35 explained should have been written 4 years ago. This would have given me a clear direction of what I was supposed to do instead of going with the flow for many years…
#2 Write down the mission of your business
We keep hearing about the famous “mission” of our employers. Well you know what? This is more than just a cool management word. The mission, in a single paragraph (preferably in a single sentence) resumes your whole business idea. It is a statement telling exactly what your business is about and what you intend to do in the future. If you can’t answer this question; then you need to go back to point #1 of your checklist.
Here’s The Financial Blogger’s mission:
My goal with The Financial Blogger is to share my successes and my failures. I’ve recently had some serious success at work and with my online company. However, I am proudly a techno retarded blogger who couldn’t manage to pay off his debts with a higher income.
#3 Write down a whole business plan
I’ve already written about how to write a business plan. This will help you define what you want to do with your new business along with what you will need to start it up (funding, type of bank account, line of credit, paypal services, an accountant, maybe a lawyer, a partner, a virtual assistant or a web assistant). I suggest you start smaller rather than bigger. It’s not true that you need a full team of workers at first. Try to do most of the things on your own and hire freelance help for specific and specialized tasks.
#4 Find a good accountant/lawyer
I would start with the accountant and then ask him for reference to find a lawyer. Accountants are expensive but they are necessary if you want your stuff to be completed according to tax laws ;-). Your accountant will be your best friend to help review your business plan and look at your business structure. He should advocate for incorporation (step #5). You also don’t want to waste time with book keeping. This is time consuming and it’s not adding any value to your company. This is why I outsource all book keeping to my accountant ;-).
#5 Setup a Corporation (Canadian information only)
I’m far from being a lawyer, therefore, I strongly suggest you seek for professional advice for this step. However, for my company, we decided to setup a corporation. We incorporated our business because we were serious about our company and because we are 2 shareholders. A corporation is not too hard to setup (it usually takes a lawyer and $1,000 😉 ). You can get more info about incorporation in Canada from this government’s website.
I strongly advise you to create a corporation as an Inc. works as a legal entity (which also means that the Inc. is taxed at 19% for the first 500K of revenue per year while I am taxed at a much higher rate!). The biggest advantage of an Inc. is the fact that you can defer a part of the tax you would normally pay if you had earned the same income under your name. Another advantage is that you spend dollars before taxes instead of the opposite as a regular employee.
#6 Open a bank account once you have received your corporate charter.
After completing step #4, you will have to wait about 3 to 4 weeks before receiving your corporate charter. This is the document that proves who owns the business and has the right to sign on behalf of the company. This is when you can open your bank account. Try to take the smallest and cheapest package at first. Then, you can always upgrade according to your business needs.
#7 Make money… get insured!
As soon as you start making money, check for a permanent life insurance policy. This will allow your spouse or estate to buy back the shares and get some money to run the company. This is a very important point especially if you run your business with a partner. If you eventually think your business will become your main source of income, don’t forget to get disability insurance too. This could save your mortgage during a rough time ;-). We took a 250K life insurance policy in 2010 to make sure that our respective spouses would have something if we pass away.
#8 Build your empire, one step at a time
Don’t be in a rush; take your time. If you are going to be successful, you are better off being able to control this success and manage what is coming at you. Take one project at a time and don’t burn yourself out. We have slowed down our company many times since we wanted to make sure that we were handling all our websites correctly.
I’m obviously not an accountant or a lawyer, but if you have more specific questions, I’ll be happy to share my own experience 😉
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