Wednesday, April 7, 2010

Creating an IT consultancy in the USA, Episode 0

As I spend my evenings researching how to create my own IT consultancy in the USA, I’ve come across one main website that has most, if not all of the information that I need: www.Business.gov

I haven’t even scratched the surface yet and already I’m swimming in the midst of “fictitious names”, EINs and Schedule Cs. Fun.

One article in particular on Business.gov has been helpful to me in my larval stage: “10 Steps to Starting a Business” I’ll reproduce those 10 steps here so I can fill in the blanks with the specifics of my own situation.

1. Research and Plan Your Business

Located here are helpful guides such as How to Write a Business Plan, a video on Business Planning and Research and a Start Up Assessment tool.

In my case, this is all overkill since I’m simply creating a consultancy so a friend can contract me to do a large job for him. Maybe someday I’ll actually make a business out of it, but not today.

2. Get Business Assistance and Training

More information on business plans are offered here, but there is an additional emphasis on Small Business Counseling as well as financing your venture.

This too is unnecessary for me. Unless I can get someone to finance my protein shakes and Clif bars. Anyone?

3. Choose a Business Location

Tips on choosing the right location to set up a business are given here as well as listing various zoning laws and precautions.

Once again, this is irrelevant to me since I’m not actually setting up a storefront nor am I currently seeking customers. I’m just sitting in my home office in front of a computer, hacking away for entirely too many hours in a day with no reason to venture outside of the house.

Maybe I should try eHarmony…

4. Finance Your Business

Some of these bullet points make me think that the original author really only had 7 points, but stretched a few just to make a nice round number. This is repeating much of point 2.

I’m not looking for financing so I can cross this step off. Hey! This isn’t going too bad. Four points down and I haven’t had to do a thing!

5. Determine the Legal Structure of Your Business

Finally, a point that I need to pay attention to. Fortunately, there are very few options, and only two make any sense. The options are a Sole Proprietorship, Partnership, Corporation, S Corporation, LLC, Non Profit and Cooperative.

Of those, a Sole Proprietorship (SP) and an LLC are the only reasonable options for me. If I choose to become a Sole Proprietorship, I am personably liable for any debts or lawsuits. That means my car, clothes, baseball card collection and family heirlooms are all fair game.

If I choose a Limited Liability Company (LLC), I have a limited amount of liability that I can be responsible for. In otherwords, I won’t literally lose my shirt.

However, there seems to be a significant amount of extra paperwork that is needed and taxes seem to be a bit more convoluted than they normally are anyway.

Furthermore, I’m only becoming a consultancy for one job and I seriously doubt that any liability lawsuits are in my future (famous last words!). If I want, I can always change to an LLC at a future date, but for now I’ll choose to go with a sole proprietorship.

I’ll tackle the last 5 points soon. Until then… yes, I’m growing a beard. 23 days and still going strong.

demotivational posters

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