The first step is to realize that you actually have a business. Most of us grow up with the notion that we are going to work for someone else’s business. Get a job, pay the bills, own a home, marry, have x number of kids, pay taxes, and then die. Hope comes in the form of bigger and bigger paychecks, more and more benefits, and early retirement. But for some of us, that is not the road we end up travelling.
Take me for example. I worked for a living for many years in the school system earning my paycheck by dint of teaching others and by adding degrees to my own resume. The freedom of the flexible schedule and the summers to myself were quite rewarding. Then came the year that my tax bill was so large I had to borrow money from my credit union to pay it. I know it doesn’t seem like a magical inspiration but sometimes, no make that all the time, the gods work in serendipitous ways. I had been developing a side line based on my own love of dancing and my tax guy told me I needed to find a few write-offs. Voila! I became a sole proprietor. For the first time in my working life, I was really my own boss.
Over several years this quasi-business took on more and more life of its own. The first steps were simple: go to the county courthouse and apply for a DBA, Doing Business As license, which tells the county that you are going to make a formal announcement that is published at least four times in a newspaper that you are now doing business as thenameofyourbusiness. You can write off the expense. Modify and use a part of your house for the business, set up your phone as a business line, purchase sound equipment to use for your classes, advertise in the paper, use your car to travel to clients, take workshops, and travel to competitions, all can be written off. Any local licensing or national copyright licensing, write it off. All good but the best thing for me, the elephant in the room, was the discovery that in this business, my clients actually wanted my services. I didn’t have to pursue them, didn’t have to follow someones curriculum, didn’t have to assign homework, or detention. They came to me.
Gradually, but surely, as you might expect this tax break became my main preoccupation and then my main job as I retired from the public school system at age 53. At that point, though I was quite happy with what had transpired, I also found myself with the freedom to explore other opportunities. Now that I had let go of the working for others syndrome I became an independent contractor.
Since I had spent many years planning and thinking for others under the guise of teaching, I decided to open a second business as a consultant. This too provided its own set of write-offs and its own set of unique learning experiences. I had always been eclectic in my interests and had always incorporated this into my teaching. As a consultant, I began to put this to use since each client was unique and each required that I learn specific information about their businesses in order to help them. Again, Serendipitous took a hand. One of my clients ran a small business of her own as a sole proprietor – a roadside fruit and vegetable stand. Initially, I helped her set up her sole proprietorship but gradually I found myself sitting on the roadside selling fruit and vegetables too.
Between us two, we took that business from the roadside stand to concession stand at horse shows and sporting events to eventually a permanent business with a summertime concession at the OC Fair. And that brought me to the realization that incorporation was the next logical step. Would that I had known how to access Google then but this was in 2002 and we had just barely joined the Internet. But that’s another story isn’t it? Anyway, I took us to our trusted tax accountant and for a mere $700 plus fees of $500 to the state, we were on our way. A service which by the way these days is available usually on-line for under a $100.
As a corporation we have been able to institute a health care plan, purchase vehicles and lease them back to ourselves as its employees, and most important of all, pay us a salary while alleviating us of any personal liability from the corporation’s actions.
Most of what has happened was through sheer perseverance but some of it was through paying attention to the attributes that make a business different from a hobby. And we always paid attention to that first lesson I absorbed when I had to borrow money to pay my taxes. Make it a business.