As with any business, there are a number of essential elements to consider when properly and legally establishing your professional organizing business. I won’t reinvent the wheel here, but what I will do is share some amazing resources that will help you navigate all the jargon and different advice. Please note, none of the contents of this site qualifies as legal advice.
When considering the business essentials of creating a new business, there are five primary areas to consider:
1. Business Structure
2. Business License & Permits
3. Banking
4. Accounting
5. Insurance
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Business Structure
In order for your business to be legal and legit, you’ll need to form a business entity. Deciding on what type of entity to form will depend on your business and situation. Please note, none of the contents within this site qualifies as legal advice.
There are several different business entities, but some of the more common ones include:
- Sole Proprietorship
- Partnership
- C Corp
- S Corp
When determining the best structure for your business, you’ll want to consider ownership, liability to you personally vs. business liability, and taxes. The chart below demonstrates how these entities compare.
Sole Proprietorship
- Owned by one person
- Unlimited personal liability
- Personal tax only
Partnerships
- Two or more owners
- Unlimited personal liability unless structured as an LLC
- Self-employment tax (except for LLCs)
- Personal Taxes
Limited Liability Company (LLC)
- Owned by one or multiple people
- Owners are not personally liable
- Self-employment tax
- Personal tax
C Corp
- Owned by one or more people
- Owners are not personally liable
- Corporate tax
S Corp
- Owned by one or more people (all owners must be US citizens)
- Owners are not personally liable
- Personal tax
Once you’ve determined the best entity for your situation and confirmed that your business name is available, it’s time to make it official. It’s time to register your business with the state.
A great resource for entrepreneurs is the Small Business Administration, which provides helpful information when setting up and starting your business. Click here for more details on registering your business yourself.
If setting up an entity on your own is too far outside of your comfort zone, then I’d suggest using NorthWest. NorthWest makes the process super quick and easy. It only took me about 10 minutes to file for my LLC with Northwest.
Once your business entity is established with your state, you’ll be provided with a federal tax ID number (EIN) from the IRS. You’ll need this number for future use.
Now, one of the biggest questions I get from new organizers is, “do I really need to set up my business now, or can I just wait and see how things go”. Let me ask you, if you’re driving a new car off the lot, do you want to go ahead and have it insured, just in case? Or would you rather wait a few weeks and see how it runs? It’s always a good idea to protect yourself and take the additional steps to ensure your business is protected and legal prior to kicking off. I’m not saying you can’t organize for friends or relatives, but I would never suggest that you begin taking on paying clients before being legally established and insured, just to be safe.
Business License & Permits
Once you have an employer identification number, which will be provided whether you’ve set up an LLC or sole proprietorship, you can file for your business liscense and any necessary permits. Check out this awesome state by state guide on resources for filing for a business license and researching permits you may need based on your area.
Banking
Another reason that I always suggest that you take the steps to set up your business structure when first starting your business is the banking aspect. Many of your business expenses are going to pop up in the beginning (website, gas, training, supplies, etc). By setting up your business structure, you’re now able to open a separate business bank account. By using this bank account exclusively for your business, you’ll be able to better track your expenses, operating costs, and profits, which will be of great value when you go to file your taxes.
A few features you want to look for as a small business owner are:
- No monthly service charges
- Unlimited card transactions at no additional cost
- No minimum balances
- Low payment processing fees
Based on these features, my bank of choice for business banking is NOVO. NOVO has no minimum balance requirement, no service fees, and integrates with many other services including Stripe, Quickbooks, Xero, etc.
Accounting
To help you manage your business finances, you’ll need some accounting software. The system that I recommend is FreshBooks. FreshBooks is similar to Quickbooks, only at half the price.
If you’re looking for a free option, then Wave Accounting is free and comes highly recommended. I have heard many organizers and small business owners state that they outgrew the Wave features fairly quickly, which is why I chose to go with FreshBooks. I just didn’t want to have to manage migrating all that data over.
Insurance
Insurance is another area where a lot of organizers are afraid to invest before building up their business. But in reality, business insurance is meant to give you peace of mind. While I had organized many spaces for friends and family, I knew I wouldn’t feel comfortable going into someone’s home without the proper insurance. I’ve worked in HR in the past, so I know how quickly a good relationship can turn sour. Accidents happen, and you don’t want to leave yourself open to a law suit. Below are a list of insurance companies that come recommended from other organizers:
Be sure to also compare to a local agent, which may be able to get you a more affordable rate.
As always, if you have any questions head over to the private Facebook group, and don’t be shy.
Once you have your essentials figured out, you’ll want to start working on pricing and packaging your services.