By developing your business as a part-time side gig, you can greatly reduce the personal and financial risk that comes with starting a new business from scratch.

If you are eager to get the ball rolling with your side hustle, here are 4 strategies to enhance your chances of success.

01 - MONETIZE YOUR PASSION

The quickest and easiest way to get a side hustle going is to start with something you truly enjoy doing, you are already good at doing, and that provides value to those around you. By turning something you are passionate about into a money-making venture, you’ll likely have the motivation to see things through when the going gets tough, because even when you are not making any money, you’ll still be having fun. If you are working a day job, find something you enjoy doing and for which you already have the skills, experience, and industry knowledge. For example, if you work in marketing and really enjoy creating your company’s digital media, you might launch your own e-newsletter or graphic design service. 

But first, be sure you aren’t violating the terms of your employment agreement with your current employer. As your Personal Family Lawyer® firm with business planning expertise, this is something we can help you with to make certain your new venture doesn't get you into any legal trouble. If you already own a business, find ways to generate new income streams from your current operation. From affiliate marketing to consulting and creating new digital platforms, there are an array of different options to choose from for creating new revenue sources. Not sure where to start or which options to choose? We can help you with that.

Your choice of entity will not only determine the rate at which your business is taxed, as well as how and when you are required to file your taxes, but it can also impact a variety of other factors affecting both you and your company. 

Last week, in part one of this series, we covered the tax obligations associated with three entity structures: Sole Proprietorships, Partnerships, and Limited Liability Companies (LLCs).

Here in part two, we’ll cover the tax treatment of the remaining two entity structures—C Corporations and S Corporations—along with discussing the benefits and drawbacks related to each one.

C CORPORATIONS

A C Corporation is a separate tax-paying entity that files its own tax return, Form 1120, to report its income, as well as claim deductions and credits. Corporations taxed as C Corporations currently pay taxes at the corporate tax rate of 21% on all net income.

Your choice of entity will not only determine the rate at which your business is taxed, as well as how and when you are required to file your taxes, but it can also impact a variety of other factors affecting both you and your company.

Some of these factors include how you pay yourself, your risk of being audited by the IRS, the type of tax deductions and tax credits available to your company, and the types of strategies you can use to reduce your tax bill.

That said, each entity comes with its own rules and requirements governing its tax obligations. Moreover, depending on your company’s size, location, the number of owners and employees, and its revenue, certain entities won’t be practical from a tax-savings standpoint. Given this, when it comes to paying taxes, there’s no single entity that works best for every business. On that note, here we’ll provide a brief overview of the tax obligations for each type of business entity, along with some of the advantages and disadvantages inherent to each structure.

While this article can serve as a good starting point for helping you understand an entity’s tax benefits, you should always consult with us, your Personal Family Lawyer® with business planning expertise to get our advice before making your final decision.

Yet, despite the critical role they play in a company’s success, far too many business owners fail to take their agreements seriously.

Whether it’s winging it by creating your own agreements or using cheap, do-it-yourself (DIY) legal documents you purchase online, failing to treat your legal agreements with the respect they deserve can seriously cost you.

In fact, just one poorly constructed agreement could end up costing you tens of thousands of dollars in attorney’s fees and court costs—or even put you out of business entirely. 

Last week, in part one, we covered the first 5 of 10 pitfalls that can put your company in serious jeopardy if you take the DIY route with your legal agreements. Here in part two, we’ll cover the five remaining pitfalls that you’re likely to encounter when going it alone with these vital documents.

Yet, despite the critical role they play in a company’s success, far too many business owners fail to take their agreements seriously.

Whether it’s winging it by creating your own agreements or using cheap, do-it-yourself (DIY) legal documents you purchase online, failing to treat your legal agreements with the respect they deserve can cost you significantly.

In fact, just one poorly constructed agreement could end up costing you tens of thousands of dollars in attorney’s fees and court costs—or even put you out of business entirely. 

Given this potential risk, having an experienced business lawyer like us prepare—or at least review—your agreements is absolutely essential in protecting you and your business. To demonstrate how complex legal agreements can be and how ill-prepared you are to draft your own, here are 10 pitfalls that can put your company in serious jeopardy if you take the DIY route with such important legal documents. 

Yet far fewer business owners put the same effort into planning for their company’s continued success following their retirement, incapacity, or death.

However, not planning for the future of your business once you are no longer around to run the company could have disastrous consequences for you, your team, your clients/customers, and your family. And of all the potential risks facing your business, the two that are impossible for you to avoid are your incapacity and death—indeed, no one is immune to old age, illness, or death.

Given this liability, creating an estate plan for the continued success of your business should you become incapacitated or when you die is just as critical as any other planning you do for your business, if not more so. The best part is that when you create an estate plan for your business, or a succession plan, it makes your company more resilient, less dependent on you overall, and can greatly improve your ability to take vacations, and have the freedom from your business you probably desire. 

Seeing so much of your hard-earned money wind up in the government’s hands can feel like a shakedown. That said, focusing a relatively small amount of time and effort into strategically reducing your taxes can pay major dividends.

Some people resist implementing creative tax strategies because they’re worried it’s going to get them in trouble with the IRS. However, as long as you do things correctly, there’s absolutely nothing illegal or risky about strategizing to pay the least amount of taxes possible.

On the other hand, it is illegal to evade taxes. As the late Martin Ginsburg, Georgetown Law professor and husband of the recently deceased Supreme Court Justice Ruth Bader Ginsburg, used to say, “Pigs get fat; hogs get slaughtered.”  In other words, you want to be smart when it comes to saving on your taxes, but not greedy.

As the end of 2022 approaches, we’re entering into the most critical time of the year for tax strategy, and this two-part series outlines how you can get fat, without getting slaughtered.

Getting the cash flowing and keeping it flowing is the lifeblood of your operation. Without cash flow, you can’t pay your bills, hire your staff, purchase your inventory, or keep your customers coming back. However, you don’t have to have an MBA to generate big-time profits. All it takes are basic street smarts about the key ways to best use—and not lose—your money. 

Here are four simple finance hacks to help get your operation off to a running start.

1. GET CLEAR ON EXACTLY HOW MUCH YOU NEED

Far too often, new business owners launch their operations without a clear understanding of exactly how much money they need to make in order to meet their basic financial needs. But this is a recipe for failure. 

By establishing clear goals based on the reality of how much revenue you actually need and how many clients or sales you need to generate that revenue, you will be able to stay focused on taking the actions required to achieve your financial goals, rather than wasting your time, energy, and attention wondering what you should be doing.

When you work with us, we can review and support you to update your company’s financial needs on a regular basis using a process called Money Mapping. From there, we will help you determine if your business is appropriately structured to meet those basic financial needs.  

Oftentimes, aspiring entrepreneurs jump headfirst into business ownership, with false expectations of what it takes to run a successful business, and they quickly find that the reality of owning a business is not at all like they thought. 

As with any serious endeavor, you need to approach your new venture with your eyes wide open. With this in mind, here are eight questions you should ask yourself to get a better idea of whether or not business ownership is the right path for you. Of course, these are just a few of the factors you’ll need to look into when starting a new company, so before you open your doors, make sure to meet with us, your Family Business Lawyer™ to discuss the specifics of your particular operation.

1. WHAT ARE YOUR MOTIVATIONS FOR STARTING THE BUSINESS? 

If you are starting a business because you want to make more money and work less hours, consider whether business ownership is the best path. Yes, when you own a business, you do not have any cap on your income, but starting and running a business will require you to work harder than ever before, likely with little to no pay at the beginning, and none of the security or certainty of a 9-5 job. 

Beyond getting sued or hit with hefty fines for misclassifying an employee as a contractor, you must also be careful to properly secure ownership of anything an IC creates for you. This is particularly true when it comes to your intellectual property (IP).

And whether you know it or not, IP is one of your company’s most valuable assets. Indeed, a recent study found that up to 80% of the value of today's typical business is made up of different forms of IP. 

Do You Actually Own The Work You Are Paying For?

Unlike employees, with whom you generally own automatic copyrights to everything they produce while working for you, ICs typically retain full copyrights to their work—unless they’ve signed a written agreement stating otherwise. Indeed, if you don’t have properly drafted agreements in place, you may not even own the work you pay ICs to produce for you.