5 Tips for Starting (and Running) a Side Business: : Action Financial Strategies LLC | New Holstein, De Pere & Cottage Grove, WI

5 Tips for Starting (and Running) a Side Business:

This article covers a few best practices when running a side business. Sure, sometimes these side businesses turn into full time businesses, but that doesn’t mean the foundations and be practices won’t apply. It pays to start implementing these strategies early so that you build a go foundation for your business. These strategies will namely apply to non-MLM businesses where you a either taking payment directly, or in many cases receiving a 1099 for services rendered.

  1. 1 Set Up A Proper Legal Structure If you are going to operate a business, then you should have a clear business entity to operate under. Many small business owners choose to set up a limited liability company (or LLC) for this very reason. If maintained properly, the LLC can serve as a legal veil if you will, that separates the actions of the business from your personal property. Also, for operating purposes, you will want to get a separate bank account for your business. That way you have further separation from your business account and your personal accounts. The LLC is only one type of business structure. S-Corporations are equally as popular, and for many, might be the preferred option. I suggest consulting with a CPA to determine the best tax advantaged structure for your business.
  2. 2 Don’t Mix Personal & Business Finances If you are in the habit of having the business buy things for you personally to use that have no direct tie to a business need, you could be opening yourself up to unnecessary risks. Additionally, if your business is in the habit of making monthly purchases or recurring monthly expenses to operate consider establishing a line of credit or open a business credit card which could further enhance legitimacy and organized financial management of your business.
  3. 3 Strategy to Enhance Retirement Goals This tip lends to more of a strategy for those that are looking to use their side business to enhance their goals for retirement, or at least saving up faster for a future goal. There can be different ways of setting up and funding a benefit for yourself with the net profits from your business. This could be in the form of establishing a retirement account for yourself, or simply funneling your cash flows to other investment or saving pursuits. You may want to think of your business as a means to accelerate your financial goals by spinning off cash to fund those goals strategically.
  4. 4 Operate Compliantly & Protect Your Business Pro tip number four is to get any insurance and or licenses you’ll need to compliantly operate and protect your business. This might be as simple as a business owner liability policy which provides general liability coverage and pays for damage or loss of your building, equipment, and inventory. You may also want to investigate adding an endorsement to your homeowner’s policy for operating a home-based business if you don’t have business premises elsewhere.
  5. 5 Create a Budget & Estimation of Earnings Depending on how new your business is might make this initial exercise a little bit of a challenge but try your best to put something down that would allow you to benchmark against. This might be as simple as using an excel spreadsheet, or more sophisticated software such as Quickbooks® or other accounting software to monitor and track your ongoing profits and losses. Doing this should give you insight as to the growth or decline of your business overtime, as well as insights as to what you might need to change like cutting certain expenses or perhaps changing prices to maintain the growth or stability you want for your business.

I hope these five tips prove to be a great start to add momentum to your goals and your business success.

headshot of Bradley

Bradley Ruh Owner, Financial Adviser

This material is for general informational purposes only and was produced by Action Financial Strategies, LLC.

SMRU # 5075005.1 Exp 11/7/24