by Elise Bowerman
This topic may sound funny being on a yoga and moms resource website, but the reality is – so many parents have hobbies or small businesses who are ready for greater success.
Whatever you're doing where people are paying you is a business. You are an entrepreneur! People are willing to pay you money for what you do. (Not everyone can say that.) You have something special to grow into a bigger success story for yourself, to benefit your family, and actually help our economy.
What I’ve realized in the 10+ years being an independent yoga contractor (aka self-employed) is most people who own a business have no idea what to do to create financial boundaries for success and most importantly protect their personal bank account if something goes upside down.
This article is for all who want more. You know you’re really good at making that thing that everyone wants or you’re so busy because your services are in high demand - you may wonder ‘how can I make this profitable and beneficial for myself and customers?’
If these things aren’t on your mind, then scroll on to the next post. This isn’t for you. This is for the hobbyist or dedicated service person who is ready to fire up their awesome ideas for success.
As with anything new – consult your business-minded friends, colleagues, accountants, and lawyers to figure out what is best for your specific situation. What I’m offering is what has worked for me, from my non-lawyer and non-accountant education, and trust will support the majority of our readers. I’m a real person like you who would have appreciated a bullet point list of what to do and why when I was figuring out how to make my yoga offerings into a respected business.
Create a Limited Liability Company (LLC)
First things first – get yourself protected. LegalZoom.com states the benefits clearly:
“LLCs are responsible for their own debts and obligations, and although you can lose the money you have invested in the company, personal assets such as your home and bank account can’t be used to collect on business debts. Your personal assets are also protected if an employee, business partner or the business itself is sued for negligence.”
There is nothing more important than to separate yourself from your business. What you offer or create is separate from who you are. Don’t let someone take advantage of your trust, naivety, or lack of legal protection. Creating an LLC is the fastest and most sure way to separate your personal assets from anything business related.
Visit your government’s website and check out their business section. Search key words, like ‘how to start a business’ or ‘create business entity.’
The online process is not user friendly. Be patient with yourself and allow plenty of time to explore.
The two main departments you will refer to are Department of Licensing and Regulatory Affairs (LARA) and within LARA: Corporations Online Filing Systems (COFS). You will return to COFS for most forms to be completed about your LLC.
Find an available entity (business) name
Visit Michigan.gov/lara > Online Services tab > Business Entity Search button.
Type in the business name you would like to have. If no results are found, then the name is available to use.
Next, visit Michigan.gov/lara > Online Services tab > Corporations Online Filing System (COFS) > complete form 700 – Articles of Organization to create an LLC.
When tax season arrives typically ‘sole proprietorship’ is what identifies you within your LLC.
You may change this business name by completing form 541 – Certificate of Assumed Name at a later date. This is also known as a DBA (Doing Business As). For instance, I own Elise Bowerman, LLC with a DBA Sweet Momma Yoga.
I conduct all business using the name Sweet Momma Yoga, LLC. Both entities are valid if need be. I did not create a new business entity (LLC), because that would have been more paperwork for tax season.
When you know your business is official
You will receive an Employer Identification Number (EIN) for your business entity. This number identifies your business for all taxes, employees, etc. rather than your business name.
Get a mailing address
If you do not own or lease brick and mortar (a physical location) then you may want to consider using a different mailing address opposed to your home address. This way your customers and public will not be able to find out where you live through your business name.
United Postal Service (UPS) have mailbox locations which may be convenient for you and are valid mailing addresses for business entities in Michigan.
Once you have a mailing address (if it’s different than what was indicated on form 700 – Articles of Organization for your LLC) then you will sign in to your business entity on your government’s website to complete a form of new address or location.
Visit Michigan.gov/lara > Online Services tab > Corporations Online Filing System (COFS) > complete form 520 – Certificate of Change of Registered Office and/or Resident Agent.
Protect your bank account
Open a business checking account now that you have an EIN and mailing address. (I recommend going through a credit union rather than a bank.)
Come tax season all your expenses and income will be in one spot. From an organizational standpoint – this is a must.
Use a business credit card (given by bank/credit union) or business debit card for all business expenses.
Whether you accept PayPal, Venmo, or other merchant account systems – you can deposit all into your business bank account, then pay yourself a real paycheck (withdraw) anytime.
BONUS how to price your services or products
If you want to be legit, you must do legit. Make it easy as possible for people to pay you. Accept all forms of payment: cash, check, and especially credit cards.
I love supporting local businesses. What I’ve noticed over the years is the ones who financially struggle the most are obsessed with not spending their own money to make money. What I’m referring to is creating the ability to easily accept all forms of payment without inconveniencing the customer.
Nothing is more annoying and will lose my business quicker than when an owner only accepts cash, or gives a discount for cash or check, or adds an extra percentage for credit card transactions. It’s confusing to remember who accepts what and is discouraging to the customer who forgot their business likes things done one way. (Insert eye roll.)
Set one price for each service or product no matter how someone pays. The price must be fair where both customer and business benefit.
Prepare for customers to pay with credit card. Add an estimated 3% per transaction to each item in the marked price. Consider it a small bonus if someone pays by cash or check.
Basics of being legit
This is the very baseline to truly create a respectable business you desire and deserve. You can do it. It’s not more complicated than this.
Our economy will be better when small business ownership is taken seriously by more small business owners. Not claiming income is a way to live in stress and deceit. Be open, honest and true. You will experience a positive shift in your work when you treat your business like a business. You have a lot to offer in your expertise - and it is valuable.
If you would like to connect one-on-one to discuss this and more ways of making your business a success I’d love to help. Schedule with me when you’re ready. It's powerful what we can accomplish in 30-minutes.