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Most aspiring entrepreneurs have big dreams about their new venture.
They know exactly where they want to go, but they don't know where to start.
It's understandable. When I started my real estate investing business, I remember having huge ambitions but no tangible direction in taking that first step.
In my first year, a few key elements had to be in place for my little company to function correctly, and this infrastructure applies to almost any work-from-home, “solopreneur” business.
Luckily, it's fairly easy to implement these things, which play an important role in protecting our interests while helping our businesses function seamlessly, day in and day out. We break them down into three simple steps.
Step 1: Set Up Your Business Entity
Setting up a legitimate business entity for your company is an important move.
REtipster does not provide legal advice. The information in this article can be impacted by many unique variables. Always consult with a qualified legal professional before taking action.
Most real estate investors (myself included) run their businesses as a Limited Liability Company (LLC) because of a few reasons:
- It offers instant credibility with your customers.
- An LLC can protect your personal assets against legal action.
- It has tax advantages that allow your business profits and losses to pass through to your personal tax return, whereas most other corporations are double-taxed.
There's a lot more to it than these three advantages (I'm hardly even scraping the surface here). When I first tried to familiarize myself with the different types of legal entities and what each was designed to do, this book gave me a very good overview. Just be sure to drink plenty of coffee before you start!
If you'd like to set up a new LLC for yourself, the most user-friendly, done-for-you service I know of is Northwest Registered Agent. Here's a quick overview of how it works.
Get Started with Northwest Registered Agent!
As with anything, there is more than one way to skin a cat when incorporating your business. I'm not saying you need to use a service like Northwest Registered Agent. It just happens to be a vehicle that makes the process easy and inexpensive.
If this tutorial looks like something you can do, then feel free to give it a shot!
In most cases, it will make sense to form your business entity in the state in which you plan to do business–but don't take my word for it. If you have questions about how this process works or want someone to handle the entire process for you, talk to a qualified attorney in your area. It will cost more to go this route, but sometimes it's worth the money to know that you're doing it right.
RELATED: Brand Your Business Right (Or You'll Hate Yourself Later)
Step 2: Set Up Your Business Phone Number and Voicemail
If you're running your business like I am, you'll interact with many people over a year: buyers, sellers, vendors, contractors, and the list goes on.
Unless you want to open up your personal life to strangers who don't belong there, you need to take a few steps to segregate your business lines of communication from your personal life. There must be clear boundaries on who can and can't reach you at certain hours and days of the week. And you can set up some of these boundaries with a cloud-based phone service.
I use OpenPhone, and it's working pretty well for me, but there are several other options if you do some searching. Notable examples include RingCentral, Nextiva, Phone.com, and Grasshopper. Some folks even tried free phone services like Google Voice. I'm not saying this can't work, but I've found that these free services don't have the same degree of customization (including toll-free numbers and faxing capabilities) to do the job.
Making Your Phone Work for You
I use two toll-free numbers in my OpenPhone account—one for the buying arm and one for the selling arm of my business. This kind of setup is completely optional (you could just as well use one local number for everything). However, I've found that separate, toll-free numbers help control the flow of communication to and from my business. It can also project the right image to my callers, depending on why they're calling me in the first place.
If you choose a paid service, record your greeting(s), create some extensions, and set up the answering rules (i.e., when you're “open for business” and when you're willing to accept calls). The ability to set up these kinds of rules is a HUGE convenience. It will take some time to do it the first time, but you only have to do it once. And believe me, it's worth the effort on the front end.
If you aren't sure how to do this, I'll show you how to handle it in just a few minutes on OpenPhone.
Step 3: Set Up Your Business Mailing Address
Almost every week, I'm reminded of how important it is to have a business mailing address separate from my home address. For the same reason that I don't want strangers calling me when I'm not working, I also don't want strangers showing up at my house for any reason.
If you're planning to send out a direct mail campaign to thousands of people, asking customers to send you monthly payments in the mail, or make a contractual offer to anyone (all of which require you to provide your physical mailing address), you'll have some even stronger reasons to take this step.
Luckily, setting up a different physical location (separate from your primary residence) where you can receive your mail is not difficult. You can do this by renting a mailbox at any local shipping and receiving storefronts like Pak Mail, the UPS Store, or even your local Post Office.
I suggest finding the most convenient location you're likely to drive by every week and simply rent one of their mailboxes. You'll have to pay a monthly or annual fee for this (I currently pay $144 per year for mine), but the cost will be 100% worth the value you get from it.
If you want to take this kind of remote mailbox to the next level, you could even go with a “virtual mailbox” service like Traveling Mailbox (check out this review that shows exactly how it works). With services like these, you'll receive electronic scans of everything without leaving your computer. You can check your physical mailbox from your phone!
A Cool Trick
When you use one of these rent-a-mailbox services, you can refer to your mailbox as a “Suite,” “Unit,” or “Apt,” as long as you include the number of your mailbox (this will make you look WAY more legit).
For example, if I rent box #604 at my local UPS Store, my address could look like this:
1234 Manhattan Drive, Suite 604
New York, NY 10458
Little do my contacts know, if they ever come looking for my “suite,” this is what they're going to find:
Believe it or not, I've had more than one occasion where various individuals have shown up—in person—at my business mailing address (i.e., my local Pak Mail store) looking for me.
Luckily, this whole system is designed to give business owners like myself privacy (because the good folks at Pak Mail aren't allowed to give out my real location). Of course, these kinds of visitors are rare, but as you can imagine, this kind of “veil of protection” is still a huge benefit!
Another benefit of these storefront mailboxes is that if anyone ever needs to deliver a package or envelope to me that requires a “sign off” as proof of receipt, the store employees can do this on my behalf. It’s almost like having a free secretary to gatekeep anyone trying to reach me or deliver something to my business mailing address! This is a major value-added service that is worth paying for.
Step 4: Set Up a Business Bank Account
If you're following the steps to set up an LLC, another important component is keeping your business and personal finances separate.
This is more than a smart accounting move; it's an important legal consideration that will help shield you from personal liability.
Of course, any bank would love to have your business. One thing I've found is that most brick-and-mortal banks LOVE to charge you fees for everything under the sun, all while keeping all of your money and paying you practically no return while they hold it for you.
If you're looking for an easier bank to work with that doesn't charge you these annoying fees and will likely pay you a decent return on your money while it's in your account. There are several online-only banking platforms that will do a great job of this.
I currently use Relay for mine, but other options like Mercury and Bluevine are also solid.
RELATED: Why Everyone Is Switching to Relay – Uncover the Hidden Benefits
Conclusion
Remember that even though these are some good moves to make when starting, you can earn your first dollar before you have these things in place.
I would recommend these steps for any new entrepreneur, but not at the expense of inaction. If you can't do it all today, don't let it hold you back from getting started.
The point is NOT to give you a list of obstacles to overcome before your first transaction but to give you a clear idea of the basic infrastructure for most work-at-home businesses.
If you're starting on a shoestring budget like most of us do, don't feel you NEED to pay for all of these things before you can do your first deal. Keep them near the forefront of your mind and try to nail them down with the first few dollars you make from your new business.
