In the past ten days, I’ve received three inquiries from readers and clients seeking advise about the form their business should take. It surprised me to learn that this was actually a significant stumbling block for many aspiring entrepreneurs.
Most of my clients are looking for more meaning in their livelihoods. They want to make a difference in someone’s life, their communities or the world. And, they need to make a living. I didn’t realize that to many self-employment seekers, social entrepreneurship means “non-profit” or “not-for-profit”. It doesn’t have to. In fact, while as a director of a not-for-profit, you can and should draw a salary, establishing a NP is not a prerequisite for making a difference with your business. Many of us whose mission is social change do legitimately operate our businesses as sole proprietorships or corporations with the intention of making a living and a difference. We file all the appropriate taxes, secure business licenses and draw a salary.
Don’t let confusion over the ”form” your business should take keep you from getting started. Establishing yourself as a NP can take time and money better spent just starting simply. You can always change the business form at a later date but just start now, build your following, refine your purpose and get some experience and profit coming in.
This suggestion is in no way meant to substitute for legal or professional accounting advise. You will need that eventually. It’s my intention to share with you in simple laymen’s terms what I have learned over more than three decades of self employment and from entrepreneurial friends and colleagues who make a living while driving change. My general rule is that if your business has a physical location and there could be personal financial risk to you or your family, it may pay to incorporate. If you have significant personal assets and you have customers coming into your work space, you can’t afford to risk someone getting injured, for example and suing you. You may find that business insurance would cover any risk and if you have customers touring your hot glass workshop, or are teaching classes at home using power tools, do consult an attorney. There are lots of other reasons to establish asset protection but when I hear clients who are running a low risk business from home, my advise is: just get started. Make a few phone calls or online inquiries to learn if you need a business license, and just get started. In most states, if you are selling a physical product, (rather than an electronic download) you will need a sales tax permit which can usually be obtained online, by fax or over the phone. Some states require a “fictitious name statement” in order to open a bank account in a business name other than your own. Again, this is a simple, inexpensive procedure.
Don’t let concerns over form keep you from getting started. Many new entrepreneurs will simply open a separate bank account, even in their own name, put up a blog or sales page and get started. If your mission is clear, you have defined what impact you wish to make, and how you will make that impact and make a profit, you can operate for quite some time as a sole proprietorship. Even if your social contribution involves donating a portion of your income to a cause, this can be simply and legitimately accomplished through careful record keeping without the time and cost of formally establishing your venture as a non profit.
Remember, the important thing is to GET STARTED. You can only make an impact if you do something.
What two steps can you take today to begin now?Lets Connect