Table of Contents
- Draft a Business Plan
- Incorporate or Form an LLC
- Register for Trademarks
- Obtain an Employer Identification Number (EIN)
- File for Necessary Business Licenses
As citizens across the United States practice Safety in Place and Shelter in Place measures during the COVID-19 pandemic, many individuals are not content to “Netflix and chill” their time in quarantine. They are picking up and learning to play instruments, teaching online learning courses to individuals of all ages, providing delivery services, or focusing on a back-burner dream, like a book they always wanted to write. They are creating, doing, learning, and working to help others and one another. In an uncertain time, these individuals are leaning into the certainty of entrepreneurship through side hustles and starting small businesses.
Entrepreneurship is accessible to one and all. Your age does not matter. Neither does your gender, ethnicity, or background. Even the present era cannot stop individuals from pursuing their small business dreams. History is full of innovators that rise up to take action and introduce the world to fresh, new ideas and processes.
Quarantine time, as difficult as it can be to embrace, is still time. Rather than spend it watching a streaming service, use the precious time you have to start a side hustle. In the aftermath, that hobby may become its own small business and help light the way for the creation of even more companies and community support.
1. Draft a Business Plan
You know what your side hustle is and its niche. It’s time to draft a blueprint. A business plan will allow you to better visualize your budding side hustle as a soon-to-be established small business. This plan helps align teams towards a common vision for the company and evaluate its feasibility from an objective and critical standpoint.
While entrepreneurs have the choice to make either traditional or lean business plans, there are a few core elements that should be emphasized in any plan.
- Executive Summary. Essentially, this sums up who you and your business are. Further details include what you do, the industry you’re in, where you conduct business, why consumers have a need for your offerings, and how the company earns money. This section is typically no longer than a page or two — you will save the majority of your information for the next element.
- Business Description, Concept, and Strategy. Here, entrepreneurs may further explain more about the company their side hustle is growing to become. Detail where you are in development stages, the goals you have to reach, and steps you will take to get there in that timeline.
- Industry Analysis. Who makes up your competition? Study their offerings. Be ready to explain why consumers would benefit from choosing your services.
- Market Analysis. Who is your target audience? Understand these demographics and your strategy for attracting, capturing, and retaining those individuals.
- Organization and Management. Include biographies of yourself and any other team members working on your side hustle.
- Financial Projections. This section covers information as it relates to your cash flow and projected profits and losses.
2. Incorporate or Form an LLC
Incorporating a side hustle turned small business provides the company with liability protection. Not sure what this term means? Liability protection creates a separation between personal and professional assets. If something unforeseen should happen to the business, such as a lawsuit or trouble dealing with business debts in, say, the wake of a pandemic, liability protection ensures the owner’s personal assets are not impacted.
Entrepreneurs may incorporate under a wide variety of entity formations. Some of these include forming limited liability companies (LLCs) that are flexible and allow you to choose your own tax structure. Additional entity formations include corporations, S Corporations, C Corporations, B Corporations, and partnerships. Take a look at your side hustle’s needs and growth as detailed in the business plan in order to determine the structure that is the best fit.
3. Register for Trademarks
Do you have a unique name, logo, slogan, or design associated with your business? By filing to federally register the mark, you are able to protect its identity and receive exclusive rights to the mark. This ensures nobody may plagiarize or steal your original trademark.
Prior to filing for a trademark, however, I would recommend conducting a name search. This allows you to determine if the mark is available for use. If there are other companies that have pending applications for a similar mark or have already registered it, you may need to return to the drawing board for your side hustle and create a new mark.
4. Obtain an Employer Identification Number (EIN)
An EIN is a nine-digit federal tax ID. It may be used in several ways to benefit your business.
- Open a business bank account.
- Establish a credit profile.
- Hire employees.
You may also opt to use an EIN on official documents instead of an SSN. The EIN acts as a safeguard for this paperwork. Additionally, once an EIN has been issued it never expires.
As COVID-19 continues, we are providing entrepreneurs with free EINs. Visit us at mycorporation.com and use the coupon code FREEEIN for your filing.
5. File for Necessary Business Licenses
Depending on your business, its industry, and location, you may need to obtain a business license or permit before fully launching the company. Check in with your local Secretary of State to learn more about which licenses your company needs.
In a pinch, we may also assist you in obtaining business licenses. Our team of professionals will research all your license requirements and provide you with the forms necessary in order to stay in compliance.
Finally, take a moment to remember that as you build your business during this tumultuous time “this too shall pass.” The fresh approach and creativity your side hustle turned small business can bring the world is invaluable. Fear of the unknown should not stop you from moving forward. Instead, choose to innovate. Doing so helps opens the world up to new opportunities.
Deborah Sweeney is the CEO of MyCorporation. MyCorporation is a leader in online legal filing services for entrepreneurs and businesses, providing start-up bundles that include corporation and LLC formation, registered agent, DBA, and trademark & copyright filing services. Follow her on on Twitter @mycorporation.