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Most aspiring entrepreneurs have big dreams about their new venture. They know exactly where they want to go, but they have no idea where to start.
It's understandable. Back when I started my real estate investing business, I remember having some pretty huge ambitions but no tangible direction on how to actually take that first step.
What I found in my first year was that there were a few key pieces of “business infrastructure” that simply had to be in place for my little company to function the right way. This infrastructure applies to almost any type of work-from-home, “solopreneur” business.
Lucky for you and me—it's fairly easy to implement these things, which play an important role in protecting our personal 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
Instead of being a sole proprietorship, which offers virtually no tax advantages or personal liability protection, it's important to set up an actual business entity for your company.
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 actually a lot more to it than just these three advantages (I'm hardly even scraping the surface here). When I was first trying to familiarize myself with the different types of legal entities and what each of them was designed to do, I was able to get a VERY good overview of it from this book. Just be sure to drink plenty of coffee before you start!
Optional: Using Rocket Lawyer Effectively
If you'd like to set up a new LLC for yourself, you can do it manually in most states through your state website, OR you can try a more user-friendly option like Rocket Lawyer.
Here's a quick overview of how to do it:
As with anything, there is more than one way to skin a cat when it comes to incorporating your business. I'm not saying you need to use a service like Rocket Lawyer; it just happens to be a vehicle that makes the process easy and inexpensive.
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.
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 that you plan to do business in–but don't take my word for it. If you have questions about how this process works or if you just want someone to handle the entire process for you, just 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.
Step 2: Set Up Your Business Phone Number and Voicemail
If you're running your business like I am, you're going to come in contact with a lot of people over the course of a year. Buyers, sellers, vendors, contractors… 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 need to be some very clear boundaries on who can and can't reach you at certain hours of the day and certain days of the week. And you can set up some of these boundaries with a cloud-based phone service.
I've used RingCentral for several years, and it has worked pretty well for me, but there are several other options out there if you do some searching. Notable examples include 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 just 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 different 888 numbers in my RingCentral 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 this in just a few minutes on RingCentral.
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—EVER.
If you're planning to send out a direct mail campaign to thousands of people, ask 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, it's not difficult to set up a different physical location (separate from your primary residence) at which you can receive your mail. You can do this by renting a mailbox at any local shipping and receiving storefront like Pak Mail, the UPS Store, or even your local Post Office.
I suggest finding the most convenient location that 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 awesome review that shows exactly how it works). With services like these, you can get electronically scan everything without ever leaving your computer—you can even 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 side 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 absolutely worth paying for.
Keep in mind—even though these are some very good investments to make as you're starting, it is entirely possible for you to earn your first dollar before you have these things in place. In fact, I'd be willing to bet that most new businesses get started without them.
I would definitely 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 what the basic infrastructure for most work-from-home businesses should look like (especially if you're serious about growing and making money).
If you're starting on a shoestring budget like most of us do, don't feel like you NEED to pay for all of these things before you can do your first deal. Just 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.