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You have made the first step to enhancing your financial health by starting a new side business, congrats! The work is now just beginning for you though. You are going to have to balance your home life and career life. However, you will find that while you continue to work your main job, your side business will have time to grow since it is not your main income.
This means you can one day turn your side business into a full time business yet you are ahead of other business owners because you can fund your own startup costs. Today, we are discussing five tips that you need to know to get even further ahead of the game.
Create a Business Entity
When you first create your side business, you will probably start operating as a sole proprietor. Many new business starts like this because it is the easiest way to get started. There are other options available with the second most common type being Limited Liability Company, LLC.
This is something that can be done easily online within your state however; you will have to pay from $20 to a couple of hundred dollars to do so. Keep in mind though when you go with a business entity such as an LLC it is beneficial if you keep your personal and business finances separate, especially for tax filing purposes.
Even though starting as a sole proprietor may be tempting, you will find that starting, as an LLC can be beneficial to you as your business grows. You will still be taxed the same way as a sole proprietor, so there is no extra headache there. An LLC makes it easy to bring on a partner or employees. If you start out this way transitioning down the line will be easy.
Furthermore, you can treat your LLC like a corporation when it comes time to do taxes. This means you may save money by utilizing the corporate tax rate. Lastly, an LLC provides you with financial protection. Usually, your personal assets are protected from company debts. This means that your losses will be kept within your company as long as you have not attached a personal guarantee to it.
Finding job security with the way the world is now is not very likely. All industries are like this regardless of how talented you may be. You can keep your resume and skills up-to-date yet still not have job security. When you have a side business, it is your “Plan B”. It will take your business some time to start bringing in profits yet when it does, you will have some income to fall back on. The extra cash you have sitting will allow you to take risks that are more professional at your full time job or even turn your side business into your main income earner.
No matter what type of business you decide upon, TurboTax can help you with all of your tax needs. From filing your taxes to providing w2 forms for employees its all taken care of when you use TurboTax.