Starting a side business slowly
"This is a great question! I've been an entrepreneur and small business owner for 20+ years and have started small businesses in 3 states that grew into nice income streams for me. I've lived off these businesses for 20+ years, so I know it can be done! First let me start by saying that the rules, regulations, requirements and laws for operating a business (small or large) legally, for the most part, are local laws and regulations. Depending on what your business does, you may have some federal rules to follow, but for the most part, it will be your locality (state, county, city) that determines what you'll have to do to comply and be ""legal"". Also, though it might be better in some cases to incorporate (and even required in some circumstances), you don't always have to. There are many small businesses (think landscapers, housekeepers, babysitters, etc.) that get income from their ""business operations"" and do so as ""individuals"". Of course, everyone has to pay taxes - so as long as you property record your income (and expenses) and properly file your tax returns every year, you are ""income tax legal"".  I won't try to answer the income tax question here, though, as that can be a big question. Also, though you certainly can start a business on your own without hiring lawyers or other professionals (more on that below), when it comes to taxes, I definitely recommend you indeed plan to hire a tax professional (even if it's something like H&R Block or Jackson Hewitt, etc). In some cities, there might even be ""free"" tax preparation services by certain organizations that want to help the community and these are often available even to small businesses. In general, income taxes can be complicated and the rules are always changing. I've found that most small business owners that try to file their own taxes generally end up paying a lot more taxes than they're required to, in essence, they are overpaying! Running a business (and making a profit) can be hard enough, so on to of that, you don't need to be paying more than you are required to!  Also, I am going to assume that since it sounds like it would be a business of one (you), that you won't have a Payroll. That is another area that can be complicated for sure. Ok, with those generics out of the way, let me tackle your questions related to starting and operating a business, since you have the ""idea for your business"" pretty figured out. Will you have to pay any substantial amount of money to attorneys or advisors or accountants or to register with the government? Not necessarily. Since the rules for operating a business legally vary by your operating location (where you will be providing the service or performing your work), you can certainly research this on your own. It might take a little time, but it's doable if you stick with it. Some resources: The state of Florida (where I live) has an excellent page at: http://www.myflorida.com/taxonomy/business/starting%20a%20business%20in%20florida/ You might not be in Florida, but almost every state will have something similar. What all do I need to do to remain on the right side of the law and the smart side of business?  All of the answers above still apply to this question, but here are a few more items to consider: You will want to keep good records of all expenses directly related to the business. If you license some content (stock images) for example, you'll want to document receipts. These are easy usually as you know ""directly"". If you subscribe to the Apple Developer program (which you'll need to if you intend to sell Apps in the Apple App Stores), the subscription is an expense against your business income, etc. You will want to keep good records of indirect costs. These are not so easy to ""figure out"" (and where a good accountant will help you when this becomes significant) but these are important and a lot of business owners hurt themselves by not considering these. What do I mean? Well, you need an ""office"" in order to produce your work, right? You might need a computer, a phone, internet, electricity, heat, etc. all of which allow you to create a ""working environment"" that allows you to ""produce your product"". The IRS (and state tax authorities) all provide ways for you to quantify these and ""count them"" as legitimate business expenses. No, you can't use 100% of your electric bill (since your office might be inside your home, and the entire bill is not ""just"" for your business) but you are certainly entitled to some part of that bill to count as a business expense. Again, I don't want to get too far down the INCOME TAX rabbit hole, but you still need to keep track of what you spend! You must keep good record of ALL your income. This is especially important when you have money coming in from various sources (a payroll, gifts from friends, business income from clients and/or the App Stores, etc.) Do not just assume that copies of your bank deposits tell the whole story. Bank statements might tell you the amount and date of a deposit, but you don't really know ""where"" that money came from unless you are tracking it! The good news is that the above record keeping can be quite easy with something like Quicken or QuickBooks (or many many other such popular programs.) You will want to ensure you have the needed licenses (not necessarily required at all for a lot of small businesses, especially home based businesses.) Depending on your business activity, you might want to consider business liability insurance. Again, this will depend on your clients and/or other business entities you'll be dealing with. Some might require you to have some insurance.  Will be efforts even be considered a business initially until some amount of money actually starts coming in?  This might be a legal / accountant question as to the very specific answer from the POV of the law and taxing authorities. However, consider that not all businesses make any money at all, for a long time, and they definitely ""are a business"". For instance, Twitter was losing money for a long time (years) and no one would argue they were not a business. Again, deferring to the attorneys/cpas here for the legal answer, the practical answer is that you're performing ""some"" business activity when you start creating a product and working hard to make it happen! I would consider ""acting as"" a business regardless! What things do I need to do up-front and what things can I defer to later, especially in light of the fact that it might be several months to a couple years before any substantial income starts coming in? This question's answer could be quite long. There are potentially many items you can defer.  However, one I can say is that you might consider deferring incorporation. An individual can perform a business activity and draw income from it legally in a lot of situations. (For tax purposes, this is sometimes referred to as ""Schedule-C"" income.) I'm not saying incorporation is a bad thing (it can shield you from a lot of issues), but I am saying that it's not necessary on day 1 for a lot of small businesses. Having said that, this too can be easy to do on your own. Many companies offer services so you can incorporate for a few hundred dollars. If you do incorporate, as a small business of one person, I would definitely consider a tax concept called an ""S-Corp"" to avoid paying double taxes.) But here too, we've gone down the tax rabbit hole again. :-)"
Thanks for your reply.  I agree shooting down the majority of Chinese as being shady is perhaps unfair. I was just left with a really bad taste after all the crazy situations I was in during those 10 years. I am sure they have some strong opinions about Americans also.   On the USA side I did bring my usual law firm in on a consultation and even contacted and consulted with a firm who specializes in Transportation Law. My wife and the Chinese side thought that was a waste of money - but it was valuable on answering many of the questions you bought up, including things like a DOT registration and so on. As for it being salvageable, I think not, as I cannot work with someone I don’t trust. The “recovery” is not much - just under $3000, as it was caught before the warehouse lease was signed/etc.  part of the problem was I required a “good faith” payment from them before the lease signing which they did not do. The Chinese side is scared of me for some of the reasons I alluded too in my original post - and they have agreed to pay that amount on Monday. I will give them a receipt for their payment, and move on without any further action. I think my wife has learned a lot from this - I have perhaps also - both about my wife and what she is willing to do and how much she wants to start a business. I agree that my demeanor is perhaps not 100% when I feel slighted - I will try to temper that some in future - but most importantly - through clearly defined roles and responsibilities. Thanks again! "There is no hard and fast rule. If there was, people could cleverly arrange to make money just often enough to stay on the ""ok"" side. It's a judgement call by the CRA and it probably starts with an audit, and depends on the reasons for the loss. Simple example: your business is selling your time at X an hour and you have expenses that you will cover if you sell Y hours a year, where Y is a lot less than the 2000 hours we have to sell each year. Maybe 300. And you had a big contract but it fell through and though you tried and tried you couldn't get another contract. This will probably be considered a reasonable loss. Another example: your business is selling art or antiques, most of which are kept in your house where you can look at them every day and enjoy them. Your expenses include lots of flights to places where these art or antiques come from, or perhaps are inspired by, along with hotel and restaurant costs, and you would need to sell your entire inventory every year just to cover these expenses, yet you only sell one or two pieces a year (or none) and there's no indication that you're particularly trying to sell more than that. This will probably be considered an unreasonable loss, and if the situation persists for many years in a row, the expenses may end up being disallowed. Side businesses often lose money at first. In fact, once they stop losing money they stop being side businesses. If you have spin up costs like buying hardware, developing software, or acquiring inventory, and you can show how long those extra costs can be expected to last, your expenses are less likely to be disallowed. That's the issue, not how many years in a row the loss occurred. This archived CRA document http://www.cra-arc.gc.ca/E/pub/tp/it364/it364-e.html gives examples of startup expenses that were allowed in years that didn't have revenue, never mind profit." "It's really not an ""either-or""... it's BOTH.  They each have their place &amp; use.  * 2-sided business cards are best thought of as **""miniature advertising brochures""** (shirt pocket/wallet-sized) -- great for certain types of businesses -- and for being generic (and cheap) handouts at show booths, conventions, etc. (Plus you can issue a stack of them to ANY employee -- 2-sided cards should be ""company"" cards, *sans* any individuals names or contact info -- just the general company phone number, website, etc).  *Other than being mere ""advertising"" one useful option is to make the back of the card have something VALUABLE on it (something that makes the person KEEP it) -- calendars, industry reference info (chart/table/common calculations, etc).*  * 1-sided business cards are **personalized ""calling cards""** (logo, person's name, title &amp; SPECIFIC contact info, phone + ext, email, etc -- in addition to base company info) -- you use them when meeting people SPECIFICALLY &amp; PERSONALLY -- and you want the back to be blank for you (or them) to scratch notes, etc. (in fact even leaving some white space on the front is a good idea).  EDIT: ***[This guy's got it nailed!](http://www.reddit.com/r/business/comments/2cjxja/one_sided_business_cards_or_two_sided/cjg8jox)***" "First off, you really don't want to get into equity research. It's a dying, shrinking business. Trust me on this. Also, sales skills are key in this business, even in research, because if you're a sell-side analyst, half your job is going to see clients (i.e. sell to clients) with the sales people.  As for your internship, put on your big boy (or big girl) pants and stick it out. There's not a lot of room for the ""personality defect"" excuse (""I'm shy"") in this business, nor is there room for the ""but I'm not good at this!"" excuse. If you got this far, you can take a deep breath, put on a smile, and achieve.   Here's how:  Shyness: Set tiny achievable goals to overcome your shyness. I'm sure you can google the shit out of this but start small, focus on speaking slowly and making eye contact. Become a man (or woman) of few, impactful words. Speaking like this will feel good.  Sales skills: Try to analyze -- in detail -- what your experienced coworkers are doing, and how: how do they sound on the phone? What language do they use? What kind of things do they talk about? How long do they speak before letting the client speak? Etc.  In general: Try to step outside of yourself a little bit: you're not a special snowflake, and nobody really actually cares if you succeed. It doesn't really matter to your coworkers if you screw up or act strange or shy, because a week after you're gone you'll just be a memory. The corollary of this is that you should consider the pressure off. They yell at you? Who cares? Fuck 'em. Just make small improvements as per the above, do it for yourself, and consider the pressure off.   Coping: find a fulfilling evening activity or goal. TV doesn't count. Reading is good. Bicycle racing is good (depending of course where you are geographically). Whatever. Make time for this activity, it will keep you sane. PLUS, being GOOD at something else, even a hobby, will validate you and help you be less shy.  Remember, this early in your career, it's all upside, so make the best of it while there isn't as much at stake." I'd recommend that you start out small in creating a business where you control the content. You're trying to run a retail store of which you don't own the content, and requires multiple resources to get that content into your store. I'd recommend that you enroll yourself into a business program at a local CC. "If you're really interested in the long-term success of your business, and you can get by in your personal finances without taking anything from the business for the time being, then don't.   There is no ""legal requirement"" to pay yourself a prevailing wage if doing so would put the company out of business.  it is common for a company's principals not to draw wages from the business until it is viable enough to sustain payroll.  I was in that situation when I first began my business, so the notion that somehow I'm violating a law by being fiscally responsible for my own company is nonsense. Be wise with your new business.  You didn't state why you feel the need to take some kind of payment out, but this can be a crucial mistake if it imperils your business or if that money could be better spent on marketing or some other areas which improve revenues. You can always create a salary deferral agreement between yourself and your own company which basically states that the company owes you wages but you are, for the time being, willing to defer accepting them until such time that the company has sufficient revenues to pay you.  That's one solution, but the simplest answer is, if you don't need the money you're thinking of paying yourself, don't do it.  Let that money work for you in the business so that it pays off better in the long run. Good luck!" Oh come on. I'm sure that's helped to gain momentum quicker but it's not like the guy doesn't have a passion, business knowledge, and the entrepreneurial spirit.   Ever heard about that amazing company that a trust fund baby started? Yeah, me neither. "The notion that you can put product on the web and sit back and watch the money roll in is a myth, plain and simple.  If you put content on the web and expect people to pay money for your products (t-shirts, etc), you have to do the work to get your stuff seen by people, and preferably the right kind of people who will buy your stuff. That means you need to know your market and provide something that they are eager to pay for. This doesn't necessarily mean buying advertising to direct traffic to your site - there are plenty of no-cost ways to bring people to your web site, but instead of costing $$ the cost is in effort and time that you have to put into it. Also keep in mind that the more participants you have in your production and fulfillment pipeline, the less you will make off every sale. Hands-off production services like Zazzle or Cafe Press do everything for you, all you have to do is provide the artwork.  However, they also take all the income and pay you a rather piddling percentage of sales.  You can get a larger percentage of sales if you do more of the work yourself - like handmade items sold on Etsy.  But then, you're doing work. Maybe you'll get $1 for each T-Shirt you sell.  If you just upload your artwork to the production service and type in some product description text into their web sales catalog, how many sales will you make in the first month?  Most likely somewhere between zero and two.  Why should anyone buy your shirt over the tens of thousands of other designs carried by the same production service?  It's your responsibility to tell people about your stuff and send them to the site to buy it.  And that means it's not a ""passive"" income. For truly passive income, invest in bank CD's, treasury bonds, or in stocks that pay dividends.  The only problem with that is you have to have money to make money this way. :/"