Many of us have thought about starting a business at one time or another. The idea of working for myself has often prompted me to quit unsatisfactory jobs and start a new career. However, only a small percentage of people act on urgency. In my case, the opportunity was offered to me two years ago. With few options and nothing to lose, I dove headlong into entrepreneurship. This is my story and current assessment of the cost of starting your own business after the first full year.
The decision to start a business
As a graduate student, I was the textbook definition of a PhD … poor, hungry, and desperate. I was living abroad and had no way to work legally due to visa restrictions. Then, I met some fellow students who had found a way around this problem. They have worked as online freelance writers. Like me, they were completing their degrees. But they had found a way to make money to pay the bills And finance their travels. It sounded too good to be true.
With a little guide, I have put together a portfolio of my writing examples and launched my profile on different platforms. In the beginning, I spent hours bidding on contracts that often didn’t have a financial return. It was difficult to attract new customers or win offers as I had no credentials or reviews. Eventually, I took an extremely low-paying job just to keep the lights on. I didn’t know, this would make a difference in the world. Being a very satisfied customer, my first customer left a positive review and more offers started coming in.
As I got more feedback, the income became more stable. And I had made several important contacts that went into business for themselves. The more we talked, the more I realized that I could too. While I had toyed with the idea of becoming a full-time freelancer, the opportunity presented itself in strange circumstances. When my father’s health began to deteriorate, I gave up my position abroad to go home. While happy to be with my family, I needed a new way to make money. So, I decided it was now or never.
The first steps to start a business
In all honesty, making the decision has always been the hardest part of any challenge. Once I commit to an idea, the path to take becomes clear. So, I got to work looking for everything I need to know about starting a business. I have read countless financial articles and blogs on the subject. Then, I talked to people I know who had already done this. And finally, I sought professional advice and hired a CPA to help me fix my accounting.
There was a lot to learn. But I did it step by step. Fortunately, my situation is much simpler than most. The cost of starting my own business was relatively low, especially as I am the only employee. However, as the sole owner, I had to learn all about the self-employment tax and stay updated on my books. Although I have come a long way this year, I am constantly learning new things.
I also made sure I comply with all local and federal laws. The most important thing was to know how to separate and protect my personal and business finances. So, I created dedicated business accounts and made sure all payments went to the right ones. In addition, I paid myself and covered the daily expenses from my personal accounts.
Currently, I’m looking at accounting courses to complement the crash course I’ve taken through YouTube tutorials and other courses to help me grow my business. However, until I find the ones that fit my schedule, I always check with my financial advisor when I have questions.
The cost of starting a business
As I prepare to file taxes for my first full fiscal year, I need to take into account the total cost of starting a business. After finishing my counts, I was pleasantly surprised with the results. While most companies work at a loss for the first 18-24 months, I have made significant gains.
The main reason is that I have low overheads and minimal expenses. The only things I need to do my job are my computer and a good internet connection. Working from home eliminates the need to rent commercial space. And all the digital and communication devices I use are free. The only fees I have to worry about are the 15% self-employment tax, my financial advisor’s service fee, and the fee for registering my business.
However, there were other unexpected expenses this year as well. In addition to buying QuickBooks, I was having serious computer problems. I paid for computer diagnostics and repairs only to have to buy a completely new laptop. Although expensive, I had enough bills in my accounts to cover the costs and keep working for a profit.
The biggest cost
Looking at the year under review, time was the biggest cost to starting your own business. Since I get paid on a contract basis, I have to be cautious about how I allocate my time. If I spend too much on a single job, I could potentially work at a loss. However, I believe that laying the right foundation will prove more profitable in the long run. Sometimes this means making an extra effort to go above and beyond for customers. Other times it is learning how to manage my business effectively. Unfortunately, time is one of the most limited and precious resources.
The other aspect I didn’t take into account was the emotional balance. Although my business is doing well, I constantly doubt my abilities and my decision. But I started this journey and I am determined to complete it. I am navigating unfamiliar territory that is both exhilarating and terrifying. I invested blood, sweat and tears in the early stages and I know I can be successful. But only time will tell …
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