After taking the decision to leave Microsoft, I decided to start my own business. I want to be a consultant. I have been doing this kind of business in the past while I was in college, but this is definitely different. My lifestyle and expenses are not the same as 8 years ago.
I have started my business now, I had a couple of things to do to get started. If you decide to go in this line of work, I want to help you out. Here are the steps I followed to get my business started. I live in the city of Seattle in Washington State, some of the steps will be obviously different if you are from a different place, but you get the idea.
1. Get an accountant
This sounds trivial, but I think everybody is trying to save a few bucks when they start. I do remember when I bought my house, I was stressed and spent over 50 hours reading about taxes. Not only I was not accurate on the information I have read, but I was definitely lacking a lot of knowledge. I decided to spend a couple of hundreds; after 2 hours it was done.
Write down questions you may have during your process and give your accountant a call.
2. Create your business with your state
My accountant recommended to go with an LLC. I am only starting on this and my knowledge is limited, but it is similar to a sole proprietorship but with a couple more benefits. You can go read online about this, the web will have a better explanation.
The Washington website to create a new business is: https://corps2.sos.wa.gov/LLC/Pages/StartPage.aspx
The price is $200.
Searching for a unique name and slogan can be complicated and time consuming (don’t forget to search the web if the .com is available too); I personally decided to name it under my name to start with. If my company gets bigger, I’ll consider changing the name in the future.
3. Apply for a business license for your city
I applied in the same time to the Seattle business license. The website is: https://dea.seattle.gov/self/
The price is $47.
4. Apply for an EIN
This is valid for any company in the United States. The idea is to get this employer identifier number instead of giving away your SSN when you do business.
The IRS website to register your company to the federal is: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Apply-for-an-Employer-Identification-Number-(EIN)-Online
This is FREE.
The site is opened only during the working hours weekdays… Make sense right? uh… well, plan accordingly.
5. Open a business bank account
After you have received your approval from your state and the EIN, go open a bank account. You should have received a UBI number in Washington State. If that UBI is not visible on this website: http://www.sos.wa.gov/corps/search.aspx, then wait one more day… the bank will use this information to open your account.
Start with a bank that offers free services… At least to start with.
6. Apply for the business license at the state level
It is easier to get this step started only once you have completed all the previous steps.
The website is: http://bls.dor.wa.gov/file.aspx
The price $19.
Once everything is created here http://dor.wa.gov, you will need to report your earning on this website. Depending on how much you reported you will earn, you will have to report your earnings monthly, quarterly or annually. There will be a laundry list of tax classification that will not apply to you… remove them and keep the one that makes the most sense: “Service and Other Activities; Gambling Contests of Chance (less than $50,000 a year)“… Of course, putting Gambling with this Service tax classification was a lot easier for them than adding another tax classification. It seriously makes no sense, but I guess we have to live with it.
Another website to register is the one for federal taxes. You need to register to this website once you receive the letter by mail. Just wait… The URL is https://www.eftps.gov
Time to start spending money on important items that you will need for your company. I will let you figure out what you need, but what about a business card? I bought my template on this site: http://graphicriver.net/category/print-templates/business-cards
I found a nice one for 8$ then went to get it printed at http://www.vistaprint.com. I got 250 cards for $10. You can find some coupons online.
If you are interested in something a little more fancy, my friend is doing custom business card with a letter press. Have a look at his website: http://www.blkwlf.com
To summarize, the final amount paid to start the business in Washington: $266
My first expenses were, business cards, fancy laptop, standing desk.