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Maryland Small Business Loans

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Subdomains Explained

Subdomains Explained

A subdomain is a domain that is attached to a root (or main domain) that can direct browser requests to specific files on a specific server.

You are currently looking at files on shivarweb.com – but more specifically, you are looking at files on the www.shivarweb.com subdomain, since I also use subdomains like app.shivarweb.com and other for experiments.

As an analogy, if a domain is like a physical address, but on the Internet, then a subdomain is like a Suite or Apartment number. Like a Suite number, they only make sense as part of the larger address, but they allow visitors to access a more more specific (and usually different) location.

That’s the short version, but there’s more to subdomains than just the definition and an analogy. I’ll cover questions like –

  • What Is a Subdomain?
  • What Is a Subdomain Used For?
  • Subdomain vs Domain
  • Subdomain vs Subdirectory
  • Subdomain Examples
  • How To Create a Subdomain

Disclosure – I receive customer referral fees from companies mentioned on this website. All data & opinions are based on my professional experience as a paying customer or consultant to a paying customer.

What Is a Subdomain

Like I wrote in Domain Names Explained, the Internet is nothing but a bunch of connected devices with IP Addresses (usually a series of numbers like 192.168.0.1). IP Addresses are not only hard to remember, but they change frequently.

A domain name is a great way to provide a memorable way to locate your information on the Internet. It’s easier to say that your website is at shivarweb.com than at 70.39.148.106

But what if you have several different Internet applications that you want to all live on your domain name? That’s where subdomains come in.

Subdomains always come before the root domain and before the top level domain (TLD). For this website, www.shivarweb.com –

  • www is the subdomain
  • shivarweb is the root domain
  • com is the top level domain

A subdomain is a part of the root domain, but remains different. You can “point” different subdomains via the Domain Name System (DNS) to completely different server locations.

cPanel documentation says that it is “a subsection of your website that can exist as a new website without a new domain name.”

You can have an infinite number of subdomains and even sub-subdomains. A website can also have no subdomain. If you just see https://website.com (note that lack of anything between https:// and website) – then you are on a site with no subdomain.

That’s how companies can have their website at www.shivarweb.com and their customer portal at login.shivarweb.com and their blog at blog.shivarweb.com – these resources are all at shivarweb.com…but all in different server locations.

What Is a Subdomain Used For

A subdomain is used for providing different resources all within a single domain name, but usually the resources will need to be on a different server.

Since a domain can have an infinite number of subdomains, subdomains are often used to limit confusion, maintain a primary online brand, and cut costs (since a new domain name costs money).

For example, a small company might have an employee dashboard that they run with a 3rd party software app but they also might have a main site that they run with WordPress on their own server. They also might have a merchandise store that they run with Shopify.

All three resources need to live under the company’s domain name, but they all live in different places. They would have to setup – employee.natecompany.com and www.natecompany.com and store.natecompany.com.

Subdomain vs Domain

So what is the difference between a subdomain and a domain name? The short version is that a subdomain needs a domain name to work, but a domain name does not need a subdomain to exist.

A domain name is a core part of you and your brand on the Internet. A subdomain is more of a technical workaround. In fact, you don’t even really need the default “www” subdomain (even though it does make some technical items easier, which is why it sticks around).

As far as using a subdomain vs a domain, it’s often simply a preference. Some companies prefer to have their separate projects on separate domain names entirely. Some companies like to have a nice system of subdomains.

Subdomains can create some technical issues (ie, cross-subdomain tracking, security certificates, etc), but they also solve and simplify other issues.

It’s usually preference.

Subdomain vs Subdirectory

A subdomain is a different domain under the root domain. It appears before the root domain in the URL (ie, subdomain.domain.com.) A subdirectory is a place on a server where certain files live. It appears after the top level domain in the URL (domain.com/subdirectory/).

In an analogy, imagine your website as filing cabinets (remember those?). A subdomain would be different cabinets while a subdirectory would be a folder inside of a cabinet.

Now, there is an ongoing & complex debate on whether it’s better to use a subdirectory or a subdomain for distinct sections / campaigns / microsites.

For example, if you have a Spanish and an English language website, is it better to use es.yoursite.com & en.yoursite.com or yoursite.com/es/ & yoursite.com/en/?

Or, if you have a blog that uses WordPress (and the rest of your site uses Drupal), is it better to use blog.yoursite.com or yoursite.com/blog/?

The short, unhelpful version is that it depends on what software you are using, what your plans are, what your marketing strategy is, and what your technical skills are.

Now, based on my experience as a marketer with a focus on organic traffic & analytics, I say that unless you have a specific, firm reason to use a subdomain, then you should always default to using a subdirectory.

Why? Because Occam’s Razor – a problem-solving principle that states, “Entities should not be multiplied without necessity” or, the simplest solution is most likely the right one.

Subdomains are seem easier to implement upfront without planning. But, they introduce a lot of complexity both upfront and forever into the future. For languages, ecommerce, SEO, analytics, development, security, etc – maintaining a single website location is almost always better.

The only caveat where subdomains usually wins is online software that you want to associate with your domain…but not with your website. Customer portals, some forums, and any internal uses work better with subdomains, since subdomains inherently separate those functions from the rest of your website.

Subdomain Examples

You probably navigate among subdomains constantly and do not realize it. But here’s a few diverse examples of websites who execute subdomains well.

Wikipedia – Languages

Wikipedia

Wikipedia is a heavy user of subdomains. They have subdomains for every language, and sub-subdomains for mobile versions.

Curbed – Brand Identity

Curbed

Curbed is VoxMedia’s real estate & interior design website. Due to the nature of real estate news, they have each focus city on a subdomain with its own independent publishing software. While it is debatable from a purley SEO standpoint, it is a perfect setup to capture local interest & traffic while building a national publishing brand.

NPR – Ecommerce

NPR

NPR is a radio network, first and foremost. Their main domain NPR.org has to be 100% focused on their member stations, news & content. But, they also have merchandise that they would like to sell on their domain to serious fans. A custom Drupal setup runs their content site, but they use Shopify for their shop. This setup is a perfect example for subdomain use.

Kopywriting Kourse – Customer Portal

Kopywriting Kourse

Kopywriting Kourse covers, well, copywriting. They have an extensive free section on their blog that uses WordPress, but they also have a members’ area that runs off customized 3rd party forum software. They want members to stay on the “Kopywriting Kourse” branded site, though the members’ area lives on a subdomain.

*Disclosure – Kopywriting Kourse is a client of mine. I actually helped them setup cross-domain analytics for their subdomains. Again, it was a bit complex, but worthwhile for their specific needs. We certainly considered hosting a forum or social network on a subdirectory, but ruled it out due to their business goals, technical needs, and the spam / security risks of not using 3rd party forum software.

How To Create a Subdomain

So let’s say that a subdomain is right for you. How do you actually make that happen?

To create a subdomain, you need to go wherever your DNS records live (not your domain registration). If you have a hosting company that is separate from your domain registrar, then you’ll likely go to your hosting company.

If it’s at your hosting company, then you’ll navigate to your cPanel and/or account dashboard. There will likely be a shortcut called “subdomains” where you can select your domain and add your subdomain. You’ll need to name it, and then tell it where the software lives on your server. Here’s a screenshot from InMotion Hosting’s subdomain area.

Create Subdomain

Now, that path is simple if both websites will live on the same server. If your websites live elsewhere, then you’ll likely need to edit the DNS records directly. To do this, find where you can edit the “Zone Records”. Once again, here’s a screenshot from my account at InMotion Hosting.

Adding Subdomain

You’ll notice that there will be several records that already exist. You’ll need to add a “Record” based on the software instructions from your software provider. Usually, this will involve setting an A record and a CNAME record. It usually depends on your software’s exact setup.

Next Steps

Subdomains are a useful, but often misunderstood part of the Web. They can be a cost-effective and versatile way to make the most of your domain name, but they can also be a clunky and complex solution to common website setup issues.

Either way, be sure to understand the tradeoffs and what tradeoffs your subdomain setup involves.

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Cloudways Hosting Review: Pros, Cons, and Alternatives

Cloudways Hosting Review_ Pros, Cons, and Alternatives

So you’re looking into using Cloudways as your hosting provider, and you’re wondering how they stack up against the competition.

But hold on one second.

I tested out Cloudways for a client project because they have gotten really good press for creating a truly unique product in a pretty staid industry.

As with any unique product, they’ll need a bit of background on the web hosting spectrum.

Let’s talk about the difference between cloud hosting and traditional shared hosting.

Usually your website files live on a part of a server that you rent from a hosting company (hence “shared” hosting). A cloud is an entire network of data centers that host website files in a distributed & decentralized fashion. Your files are deployed “everywhere” in a way of speaking. You just rent the resources on the network needed to host & deliver your files.

Imagine real-world housing for a second. Traditional hosting is like buying a house, townhouse or condominium. You buy it and you can do whatever you want. It’s cheap and predictable. But if your entire extended family shows up one day – you might have some issues hosting everyone. Cloud hosting is like having access to any house anywhere in the world whenever and wherever – you just have to pay per night for whatever house you use. It’s more expensive day to day, but when your entire extended family shows up one day – it’s a pretty simple, quick fix. You just get the 12 bedroom house for the night and no one is the wiser.

The actual cloud is built by the biggest tech companies in the world. There are not that many. Amazon is the biggest. They are closely followed by Google, Microsoft, Oracle, and IBM along with a few smaller ones like Digital Ocean.

With cloud hosting, you have more access to guaranteed resources than on shared hosting.

On shared hosting, you have a set amount of resources on a specific server that also has a set amount of resources. For example, you might have 1GB of Memory dedicated to you on a server that has 10GB of memory in total.

But suppose there are 10 customers on that shared server, each with 1GB of memory. 9 of those customers start using a full 1GB of their allocation – sometimes a little bit over. Well, now, you can’t actually use your 1GB of memory without bringing the server done. In that case, you might get throttled or one customer’s site might get taken down. Now, a good shared hosting will have network engineers who have built out ways of balancing, but it’s the core tradeoff with the setup.

On cloud hosting, you pay per use of resources on a distributed network of servers that has basically infinite resources. Your data doesn’t live on a single server. Instead, it’s copied on a whole network all around the world. If a single server gets overloaded, another server starts returning the the data.

This is the reason why NetFlix runs on Amazon’s cloud and why Twitter runs on Google’s Cloud. Those are extreme but illustrative examples. They see huge spikes at random times during the day that only a cloud can handle.

This makes cloud hosting a great option for websites that have spiky traffic (like viral news sites or a site that goes through regular launches) and doesn’t want to commit to a set amount of resources that may or may not be guaranteed.

But cloud hosting is traditionally expensive and very technical to set up, which can make it not make sense for a lot of DIYers and small businesses. The time & money to get it configured *just* right is out of reach for most businesses.

And that’s where Cloudways comes in.

What is Cloudways?

Cloudways is what’s known as a “managed cloud hosting company” headquartered in Malta. They offer hosting via the big cloud companies, but they manage the process by providing custom setup software, support, and some price smoothing to make cloud hosting more accessible to small businesses and DIYers.

See Cloudways Current Plans & Pricing.

Cloudways competes directly with other hosting companies with managed cloud-based products, like HostGator Cloud, WP Engine, and SiteGround Cloud.

However, they also compete indirectly with the cloud companies themselves like Google, Amazon, Microsoft, Digital Ocean, and Linode since anyone can buy directly from them.

But Cloudways also compete with traditional shared hosting companies like Bluehost, SiteGround, Hostwinds, Hostinger, Dreamhost, InMotion, etc. because of their pricing model & price point.

Confused yet? Yeah – me too, and I’m the one trying to write this review and explain it to my clients.

In some ways, this point is a pro for Cloudways. They are trying to do something truly unique in the hosting industry. Anything truly novel is hard to figure out. That doesn’t come along often, and it’s worth pointing that out.

Essentially Cloudways provides the guaranteed resources of cloud hosting with the guaranteed pricing of shared hosting. For a lot of businesses, this deal does not make sense — but if you know you’ll have really high highs and really low lows in your website traffic and don’t want to commit to (or deal with the technicalities of) direct cloud hosting with Google, Amazon, etc., it’s a fairly interesting set-up.

So with that said, let’s look at the Pros and Cons of Cloudways hosting.

Pros of Cloudways

There are a lot of Cloudways reviews online – usually with user-generated reviews based on anecdotes and personal experience. That’s fine but I take a different approach. As I’ve said in other hosting reviews, there is no such thing as a “best” web host. The “best” is the right fit for your project based on your goals, budget, experience & expertise. Here are the pros (advantages) for considering Cloudways.

Simplified Pricing

One of the biggest advantages of using Cloudways as your cloud hosting provider is their simplified pricing packages. Traditionally, cloud hosting pricing is pretty complex. Because you pay for what you use, it can be difficult to figure out exactly what you’re going to end up owing. Just look at Google Cloud’s pricing calculator:

Google Cloud Pricing Calculator

Cloudways has simple, monthly pay-as-you-go plans. There’s no calculating, no guessing — just straightforward monthly rates that you can choose based on your needs.

Cloudways monthly pricing

They also have a chat bot that will recommend a specific plan for you based on the number of websites you have, your traffic volume, and the purpose of your site (i.e. blog, digital agency, etc.).

Cloudways Pricing Suggestions

All in all, the pricing structure is straightforward and pretty hassle-free, which is a huge competitive advantage when comparing Cloudways to other cloud hosting providers.

Cloud Host Variety

Another interesting advantage of Cloudways is the ability to choose your Cloud Host. Cloudways offers hosting with several big cloud hosts, from DigitalOcean to Amazon to Google.

Cloudways Hosting Variety

Again, this makes Cloudways the middle man of sorts. You’re not actually hosting on their platform — they serve as the intermediary between you and the cloud hosting platforms.

Having the choice of cloud hosts in a more simplified pricing structure is definitely a pro… but again, it really only makes sense if you know you’ll have highs and lows in your website traffic and don’t want to commit to (or deal with the technicalities of) direct cloud hosting with Google, Amazon, etc.

Performance

In addition to hosting your website files, a good hosting server will also deliver those files as quickly as possible every time a visitor goes to your domain name address.

There are a lot of variables that go into how fast your website is. You can have the fastest server in the world and still have an incredibly slow website due to issues on your end. But either way, you want to have a hosting server that is fast so that you can work on your side of the equation.

One of the best measurements for approximating performance is TTFB or Time to First Byte. Again, I know that network engineers throw a lot of asterisks here and if you know *exactly* what type of website you are running – you can absolutely ask for detailed allocated specs. My goal with my hosting reviews is to provide a narrative of tradeoffs so that you can make the call for your website.

But here’s how DigitalOcean performed via Cloudways with my website when I first set it up on a clean WordPress install –

speed test for website on Cloudways

.0127s for TTFB is pretty speedy, especially when you compare it to the performance of budget shared hosts like Web Hosting Hub, Hostinger, iPage, or even GoDaddy. Actually, it’s really fast no matter who you compare it to.

Again, there are tradeoffs here. The more your use on Cloudways, the more you’re going to pay. But if you’re looking for a hosting platform that can handle spikes of traffic without throttling your performance, Cloudways gives you some great options.

Cons of Cloudways

Like any web host, Cloudways has disadvantages. There are plenty of Cloudways complaints to be found online. Plenty are valid, and some are simply anecdotal. Here are the cons that I found while using Cloudways for hosting.

Complex Set Up

Perhaps the biggest con of Cloudways is how complex it can be to get up and running.

As much as Cloudways positions themselves as the ones who take care of the complexities of cloud hosting, making it easy for business owners to get set up and focus on their actual business… the set up of hosting with Cloudways is far more complex than traditional hosting.

For starters, aside from a video on how to migrate your WordPress website and some articles, there isn’t much in the way of onboarding (AKA guiding you through getting set up on their platform). We did get a few emails from customer support, but if you wanted to dive in and get started yourself, it’s a bit like navigating a maze.

cloudways migration instructions

We also had some trouble getting our account up and running. The sign up process isn’t as simple as entering your information and diving in. Cloudways has to confirm your details, and it took a few different conversations with support to get access to our account.

Lastly, after the three day trial (more on that in a minute), we had to remigrate our account. Now – this could have been user error, but it was so complicated – even for someone who has written a ton of reviews of hosting companies. I couldn’t even tell if it had worked the first time.

Limited Trial Period

Despite their simplified pricing structure, Cloudways does have one main con in the pricing area… and that’s their limited trial period.

Usually hosting platforms will come with some sort of guarantee or trial period, so you can test them out before you commit. Cloudways offers three days — and if you’re having difficulty figuring out the migration and set up, those three days go pretty fast.

Again, if you’re committed to cloud hosting, this probably doesn’t matter to you. But if you’re testing it out, it’s a short period.

Custom Backend

At most hosting companies, you have an account area where you access to billing, account information, bonuses (ie, Google Ads credits), etc – it will also have links to your actual server backend/dashboard.

Most hosting companies use cPanel as the server backend/dashboard. cPanel is where you go to do anything with your hosting server – install any applications (ie, WordPress), set up email addresses, get your FTP information to upload files, etc. It’s simple, straightforward, and since most hosting companies use it, it’s sort of an industry standard that you can get help with anywhere online.

Cloudways does not use that setup. They use a proprietary backend for both your account administration and your server administration. It’s seamless for what they do…but it’s not really something you can Google or DIY troubleshoot.

Cloudways Database

On one hand, it is simplified and allows Cloudways to provide a truly customized experience. On the other hand, the set up is confusing and feels limiting. It’s difficult to sort through where things are, and everything feels overly technical (which really doesn’t help me “focus” on what I do best, AKA run my business).

It adds to the complexity of the platform, rather than making it more streamlined and simple.

Conclusion & Next Steps

Overall, I found Cloudways to be a unique solution for those who need the benefits of cloud hosting without the complete complexity of it. While Cloudways still isn’t as straightforward as traditional hosting companies, it does streamline the process of getting set up with a cloud host.

See Cloudways Current Plans & Pricing.

If you’re looking for the benefits of cloud hosting, but don’t want to deal with the overly technical set up, fluctuating payments, etc., go ahead and sign up for Cloudways here.

However, if you just need a solid hosting company that’s straight forward, easy to use, and can handle steady website traffic, you’re better of with a traditional hosting platform like InMotion Hosting. I’ve used them for years – and they fit most small business sites’ need for a balance between price, performance & support.

If you are more confused than ever – then take my Web Hosting Quiz here or use my website setup guide here!

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6 Square POS Features To Run Your Small Business Like a Pro

When a merchant signs up for a new Square account to start processing payments, many times the focus isn’t on the other features; it’s on getting paid — and rightfully so. But after signing into your account for the first time, it may become evident to you that there is a lot more to Square than just payment processing.

For those of you who are new to Square or if you are shopping around and checking out your options to make a final decision — you’re in the right place. We are going to take a look at what is available in the free Square POS app. We’ve discussed both Square (read our review) and Square POS (read our review) in depth, so check out their respective reviews for a more comprehensive look. Don’t forget, when you sign up with Square Payments, you get access to the POS app, the online selling tools, invoicing, and a whole lot more. 

But before we dig into all that, let’s quickly review Square’s payment processing costs for the price savvy among us. Square has very upfront pricing, but keep in mind that your processing costs change with the Square hardware you use. With the free Square POS and your own smartphone or tablet, you’ll pay a flat rate of 2.75% per swipe, dip, or tap. Check out How Much Does Square Charge? for a thorough explanation of any other fees you might incur with Square, including software. 

While it’s true that Square’s fee for payment processing may seem a bit higher on the face of things, keep a few things in mind: Square doesn’t charge any additional monthly account fees, and you can expect the same flat rate for all of the cards you process, even American Express. You can also close your account any time with no cancellation fees whatsoever. However, one of the more notable reasons we like Square here at Merchant Maverick is that merchants get end-to-end, PCI compliant payment security included with every account, without paying a dime for it.

While Square may not be as packed with features as a traditional POS, there are still a wide range of features waiting if you take advantage of them. In addition to features within the app itself, Square’s back-end management tools (centralized in the web Dashboard) are powerful. 

We have much to cover, so let’s discover the most noteworthy POS features you can start using to manage customer engagement, employees, inventory, and take charge of your business like the pro you are!

Customer Directory

Square Customer Profile

If you have an existing customer list, you can migrate that over via CSV right into the directory and get started. Every time you complete a sale, your customer directory grows to include your customer’s name, purchase history, location, and credit card (save this only with their permission). If your customer enters their email for an e-receipt, that gets added to the directory, too!

The customer directory builds automatically with each sale, but you can also manually add customer information from the Square POS or the Square dashboard. (See Why We Like Square’s Online Dashboard and Analytics App for a primer on the dashboard.) In the Customer Directory, you can add an email, birthday, make notes about their order history, or add their company, for instance.

Customer Directory

As your customers continue to shop with you, Square builds reports on customer behavior patterns, too. You can find out things like visiting frequency and when they purchased something from you last. You can view some reports from the in-app reporting in the Square Point of Sale, but to access all of the reporting features, you’ll need to get to the Square dashboard.

A lesser-known Square feature is the private feedback you can gather after a sale. Giving your customers this opportunity to share their opinions with you directly (and right from their receipt) helps keep the lines of communication open. When your customer leaves feedback, you can respond to them directly and offer to comp their item if you wish. In this way, you can hopefully also avoid negative public reviews — and keep your customers happier while you’re at it.

Inventory Management

Keeping up with inventory changes and accurately ordering the stock you need is probably one of the most critical business matters there is. Not only does good inventory management build loyalty and trust with your customers, but you can also avoid some unneeded expenses surrounding both excess and deficient stock. The great news is that basic inventory management comes along with your free Square POS software.

Have a large amount of inventory? You can easily import any existing stock with a CSV spreadsheet. You can also add items manually through your dashboard or Square POS. Either way, you can quickly update product names, prices, and quantities as needed. Setting up low stock alerts is easy — set alerts to send when inventory gets to the amount you decide. In the screenshot below, you can see that this shop has 20 prints in stock and the alert will be sent when there are three left.

Creating an Item in Square

Have different sizes or other variables of the same item? Square supports setting up different price points and variants, too. Square does not support partial quantities — but don’t lose heart! If you sell in partial quantities, you can work around this issue by setting up a Variation, as seen in the screenshot below.

Square Item Variant

Whether you’re a micro shop or you move hundreds of items a day, you can set Square up for what makes sense for your business. However, if your business has several hundreds of items, you’re likely going to find the inventory navigation a bit unwieldy. That’s because you have to scroll to find the item manually; you can’t just type the name in a search bar. Square does offer a more robust solution with Square for Retail (See our review), starting at $60/month/register/location.

To keep up with inventory and track customer spending, you can also assign your products to specific categories. Keep in mind that all of the initial work you do to distinguish your inventory through categories, variations, and accurate item descriptions pays you back with richer insights when it comes time to check out your reports. Square creates free basic reports such as Sales Summary, Sales Trends, and Category Sales, to name a few.

Square Sales Reporting

It’s worth it to mention that if you are in a time crunch or you don’t have an item already in your inventory, you can still ring it up easily in quick sale mode — simply punch in the amount, and you’re ready to take payment!

Loyalty

Square Customer Loyalty Program

The proof is in the pudding — loyalty programs lead to more customer spending. This fact is proven time and again in retail spending statistics, but Square also reports that customers spend over 30% more after joining their loyalty program. That’s a nice chunk of change, but making the loyalty program work for your business is the key to profitability.

The Square Loyalty Program is not free — it starts at $45 and the prices scale with the number of loyalty visits. That means that you won’t be paying for what you don’t use, but we still suggest checking your reports to track success. However, you really are in charge of the program and its success in your business. That’s because everything is highly customizable. From a classic digital punch card to earning points each visit, you control what — and how — your customers earn rewards with you.

According to Square, merchants get the best responses with their loyalty program by offering a meaningful reward, making the reward happen sooner rather than later (about 30 days from enrollment), and limiting the rules when it comes to earning rewards.

When you ask your customer to join your loyalty program, they enter with their phone number, which you can then promote via text messages. The other cool thing about the loyalty program is that the add-on software gives you even more data about your customer’s purchase history and buying behavior. All of this information makes it easier to personalize customer service or even plan your next promotion.

Employee Management

Small Business Owner Using Square Customer Service

The optional employee management software can make a significant impact on your business if you have multiple locations or many employees. From customizing permissions to timekeeping, performance tracking, and advanced reports, there is a lot of potential here.

With your basic Square account, you can let employees take payments as Mobile Staff and allow or disallow issuing refunds. Beyond these two functions, you are limited unless you opt for Employee Management at $5 / month per employee, however.

For example, employee-specific reporting only comes with advanced Employee Management. In the screenshot below, you can see what types of insights are available under the Employee Sales reports that come along with Employee Management.

Square Employee Management


In addition to gaining better insights regarding your employee’s performance, you also have much more control over employee permissions. Choose who has access to cash drawer reports, assign individual access codes, and choose other custom permission settings both at your Point of Sale and in your Dashboard.

Cash Drawer Management

From the Square Point of Sale app, you can enable cash drawer management to promote greater accountability across the board. Take note that you can only manage your cash drawer from an iPad or Android tablet — you can’t track and manage with your smartphone. Basic information about your cash drawer session includes:

  • Cash amount
  • Cash sales
  • Cash refunds
  • Cash paid in and out
  • Expected cash amount in drawer

Cash Drawer Management lets you know exactly how much cash you start with and what to expect in the drawer at the end of the session. You can set up cash drawer reports to be auto-emailed at the end of the business day. Because the reporting is specific to the device connected to your cash drawer, you’ll have to run a separate report for each device. You can view your drawer history at any time from your Square app, too. All you need to do is select the date and the drawer session to see details.

If you have Employee Management software, you can also control employee access to your in-app cash drawer reports. Grant your manager access while restricting other employees from accessing cash reports you may not want to make privy to everyone.

Offline Mode

For days when even the Internet can’t seem to work correctly, being able to accept payments offline prevents losing customers and sales. Offline Mode is also a game changer for the many businesses who aren’t bound to four walls. Whether you have set up shop in a more remote location or you are a mobile business traveling across the country, you can use your offline mode to swipe your card and securely accept payments. There are a few things to keep in mind when it comes to Offline Mode, however:

  1. Offline Mode only works with a magstripe swipe card, and you must swipe it.
  2. You have to connect to the Internet within 72 hours of the sale, or it expires.
  3. Offline transactions automatically process when you get connected with the Internet again.
  4. If payment doesn’t go through after connection, you are responsible for the cost of goods or services.

The good news is that there’s no additional charge for Offline Mode, just the standard rate of 2.75% per swipe. And there are a few things you can do to protect yourself from the issues listed above. When you take a sale in Offline Mode, be sure to check for the signature on the back of the card and have your customer sign so you can compare signatures. Checking your customer’s ID is also recommended, of course. You’ll also want to double check the card’s expiration date. If you remember these simple best practices, you can still accept offline payments with a reasonable amount of assurance that your sale is good to go.

Is Square Right For You?  

Square offers a wide range of features to support a growing small business. If you are adding employees and locations, Square is ready with advanced software that grows with you, including Employee Management and the highly customizable Loyalty Program. (Not to mention the less glamorous but just as important features like cash drawer permissions, inventory management, and offline support.)

Want to find out even more about Square? Check out our Square POS review for more insights on the Square Point of Sale or visit our full Square Review for more helpful insights. If you’re ready to try Square out and see for yourself, head over and set up your free Square account to start processing your first payments!

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How Health Insurance Works For Small Businesses With Only One Employee

How Health Insurance Works For Small Businesses With Only One Employee

Even though you are not legally required to purchase health insurance for a single employee by law, there are still great reasons to offer health benefits. In addition to attracting quality applicants for your position, your business also runs better when your employee is happy and healthy. And it may not be as expensive as you think.

Here is a quick rundown on procuring health insurance for both yourself and your employee. The good news? It doesn’t have to be a difficult process!

What Is Health Insurance?

How Health Insurance Works For Small Businesses With Only One Employee

Small business health insurance is medical coverage that helps you pay for general medical care, routine physicals and health exams, surgeries, and medical emergencies. Each health insurance plan is a unique combination of options that run the gamut between deductibles and no deductibles, copays or no copays, and choices about medical providers.

Is Health Insurance Legally Required For Small Businesses?

The answer to this question in general is: Maybe! But it’s not legally required if you only have one employee.

Here’s a break down of the recent health insurance laws and what they mean for your small business.

In 2010, the Federal Government passed the Affordable Care Act (ACA) and through that health care mandate, over twenty-million more Americans have had access to health insurance who didn’t before. Many of those people were sole-proprietors, independent contractors, and small business owners. Better known as “Obamacare,” the health mandate extended to employers and required businesses of a certain size to provide health insurance.

So, what exactly does the Affordable Care Act mandate? If your business is considered an Applicable Large Employer (ALE) with 50 or more full-time employees for more than six months out of the year, then you will need to provide your employees with health insurance as a legal requirement of the ACA.

If your business is not an ALE, then supplying health care for your employees is a choice. 

So as a small business owner with only one employee, you are not required to have health insurance. But, just because you don’t have to provide it doesn’t mean you should overlook health insurance as an option. Providing health care is not only a choice but also a wise investment in the happiness and well being of your employees, and the government offers tax credits to businesses with fewer than 25 full-time employees who supply health coverage.

Can You Have Health Insurance With One Employee?

How Health Insurance Works For Small Businesses With Only One Employee

Can you provide health insurance for your small business if you only have one other employee? Yes! You can! If your business consists of just you and one other person, you can offer health coverage in several ways. However, before you start shopping for plans, it’s important to understand what types of plans will be available to you and what you’ll need to show and prove to start the process.

What Constitutes An Employee?

Insurance companies have a specific definition of an employee. If you are looking into acquiring group health insurance for you and an employee, first you’ll have to prove that you actually have a single employee while you are filling out applications. According to the definitions, a common law employee cannot be you (the business owner) or your spouse. An employee is defined as someone whose workload you control, both in what that work is and how that work is performed — and that person must also be working at least 30 hours a week. An independent contractor cannot be considered an employee.

If you do not have a qualifying employee, group health insurance isn’t an option. Don’t let that discourage you from finding coverage, however. There are many independent and family plans available when during open-enrollment periods.

Can I Enroll In Group Health Insurance With One Employee?

If you have one employee as defined above (a person whose workload you control, who puts in at least 30 hours, and who is not your spouse), then you absolutely can enroll in group health insurance with one employee. If you have between 1-50 employees, the government’s Small Business Health Options Program (SHOP) group health plans are available to you.

SHOP will walk you through the process of determining eligibility, sending you to your state’s group health plan, or helping you compare and shop available plans in your area. After that, you can sign-up directly through the insurance platforms offered in your state or work with a SHOP broker who can walk you through the process. You will need to have information on the following aspects of your business:

  • Your business address
  • How many employees you are insuring
  • Employee ages, zip codes, number of dependents (sometimes tobacco use)
  • Business name
  • Tax ID

The Benefits Of Group Health Insurance

Even though group insurance isn’t your only option, it has many benefits. Here are some of the reasons why group health insurance is a worthwhile consideration:

  • Tax Credits: Under the guidelines of the ACA and the tax codes for 2019, you may be eligible for a tax credit if you enroll your business in group coverage and you have between 1-25 employees.
  • Lower Costs Than Individual Plans: Prior to the group health plans offered for small businesses with one employee, the alternative was to purchase individual plans. However, with each new person added on to a group plan, the cost per policy lowers.
  • Coverage Designed Specifically For You: Group health insurance broadens the plans and providers you can choose from, whereas with independent insurance, you get what you get. With group health insurance, you and your employee can discuss health options and choose a group health plan that fits with your needs. The opportunity to choose the deductibles and copays you want is one valuable reason to go through a group insurance provider.
  • Better For Your Business: Three-quarters of job-seekers say that health insurance and benefits are one of the key factors they are looking for in a job.

How To Enroll In Group Health Insurance

Once you’ve decided to enroll in group health insurance, you will need to gather your company’s information and your employee information to start the process. Here are the steps you’ll need to go through to fully enroll you and your employee with a group health insurance program:

Step #1: Set A Budget

Examine your business’s budget and ask yourself: How much money should I allot to health care? How much will I contribute per employee? You want to choose a plan that offers good coverage to your employee, but that also fits within your business’s budget. This will play a large role in which business insurance plan you choose. It’s vital to know exactly what you are paying for and what you might be asking your employees to pay for.

Step #2: Know What Plan & Benefits You Need

What kind of coverage are you hoping to offer? Go prepared to your first meeting with a provider or broker with an idea of what kind of policy would benefit your employee the most. Decide if you are going to include ancillary insurance options like dental and vision to the policy.

Step #3: Gather The Proper Documents

To receive an accurate health insurance quote from an insurance broker, you’ll need to provide some numbers and documentation. Before you call an agent or a broker, make sure you have gathered and prepared the proper documents. Most often, you’ll need to provide your:

  • Business address
  • Employee information
  • Business name
  • Tax ID

Step #4: Start Shopping

Whether you pass along your information to a broker or head to the SHOP site or other online sites for your state, now you’re ready to actually start shopping. Decide if you want to choose the broker approach or head out on your own. (If you decide to outsource to a Professional Employer Organization, they will take it from here!)

Step #5: Compare Quotes

Study the numbers and look at the plans. Sometimes the cheapest plan may not be in your best interest as a small business owner. Examine how much you can buy and how the plans work for your employees. Don’t be afraid to ask questions, push for numbers, and run scenarios with the experts. When comparing quotes and choosing the right health provider, do your research.

Read on for more advice about choosing the right health insurance provider for your small business.

Finding The Right Health Insurance Plan

How Health Insurance Works For Small Businesses With Only One Employee

Health insurance is a complicated issue and can feel overwhelming. So, how do small business owners (with all their extra free-time) navigate the system and find the perfect health plan choice? Start with understanding your needs as an employer; make sure you know the basic terms (co-pay, deductibles, co-insurance, out-of-pocket expenses), decide how much you can afford, and compare how different networks will work best. 

There are several ways you can compare and contrast providers and plans. Healthcare.gov offers ratings of health plans and under an in-network plan, you can plug their name into the system and see availability and ranking. You can then sit down with the list of providers in your area and look at their rankings as well.

See our longer post on small business health insurance for more things to think about as you make your choice.

Getting Started

If you can demonstrate you have one employee, then you are set to explore group health options for your company. The best place to start would be the Small Business Health Options Program (SHOP) group health plans. Tool around their site, enter your information, and see what options are available.

Health insurance is not a trivial purchase — your employees work harder and better when they feel protected and healthy. Now, with the addition of the tax benefits and expanded options, it’s easy to finally make it happen.

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How To Start And Fund A Consulting Business: The Step-By-Step Guide

Do you have a tendency to share your knowledge and experience with others? Do you enjoy giving advice that helps others better their businesses … or their lives? Did you know that you could get paid just for sharing your expertise?

While it may sound too good to be true, that’s exactly what a consultant does. A consultant is an expert that provides knowledge, expertise, and training to others for a fee. Consultants advise their clients on a variety of topics, from how to implement the latest technology to how to create a successful marketing campaign.

Becoming a consultant does not require special training, credentials, or education. You simply need to be an expert in your field. You also need to have passion — not just for your industry but for helping others truly find the right solutions for their problems.

Consultants are organized, know how to network, and are always willing to learn more about their field to provide the best services to their clients.

If this sounds like you, becoming a consultant may be your new career path. The great thing about consulting is that anyone with knowledge and expertise can do it. Starting your own consulting business has low overhead costs and doesn’t require a lot of capital from the get-go. In fact, you can even start your own business from your home office.

But maybe your goals are much bigger. Maybe you want to have the top consulting firm in your area. It doesn’t matter if you want to simply be your own boss and make a decent income or if you want to grow your business to epic proportions — this guide is for you.

We’ll explore the steps you need to take to get your business off the ground. From finding your niche to funding expenses and spreading the word about your business, this guide explores what it takes to open and operate a successful consulting business. Let’s jump in and get started!

Pick Your Niche

business loan reasons

We’ve all heard the saying, “Jack of all trades, master of none.” When clients are seeking a consultant, they don’t want someone that knows a little bit about everything. Instead, they want to work with a consultant that knows everything about one thing. This is why it’s so important to pick your niche.

To get started, consider your skills and knowledge. What industry are you familiar with? Clients are looking for an expert in their field, so identifying the industries you already know is important when selecting your niche.

Next, you need to consider what problems and pain points your chosen industry is facing. You can do online research to find out what challenges are common in this industry. Check out blogs and industry forums to get an idea of common complaints and problems. You can even talk directly with people in the industry to find out what obstacles and setbacks they face.

Once armed with this information, you need to identify your own skills and knowledge that could be applied to this field. For example, let’s say you’re knowledgeable about the construction industry. One of the common pain points in this industry is a lack of communications. Are you familiar with mobile and cloud-based software? Great! You could use this knowledge to help businesses streamline communications and improve efficiency.

When you start your consulting business, your goal shouldn’t just be something generic like, “I want to help other business owners.” Instead, you should have a more specific purpose in mind. “I help businesses in this industry find and implement the newest and best software solutions to grow their business in just 3 months.” This also serves as your value proposition. In other words, this is the value you offer; something that sets you apart from other consultants. Remember to effectively communicate to your clients what you can do for them.

Still unsure of where to get started? Consider one of these niches for your consulting businesses:

  • Biotech
  • Cannabis Business
  • College
  • Construction
  • Customer Service
  • Dental
  • Financial
  • Food Safety
  • Grant Writing
  • Human Resources (HR)
  • Information Technology
  • Leadership
  • Management
  • Marketing
  • Medical
  • Nutrition
  • Project Management
  • Real Estate
  • Safety
  • Sales
  • Security
  • SEO
  • Social Media
  • Supply Chain
  • Technology

After you’ve selected your niche, do your research to find out what certifications and licenses you need to legally operate your business. In most instances, you’ll find that a business license in your state of operations is all that you need to open your consulting business.

One last thing to remember is that even if you’re knowledgeable about your niche right now, industry trends and changes can occur in an instant. Make sure you stay up-to-date on what’s happening in the industry to ensure you’re always qualified to assist your clients.

Make Your Business Plan

Even if your consulting business seems pretty straightforward, it’s still necessary to have a business plan. There are a few reasons you need a business plan. The first is that your plan maps out your goals and how you plan to reach those goals. A business plan is also necessary when you seek funding through banks or other lenders.

Because every business has a different vision, no two business plans are exactly alike. However, there are a few common components that should be included in all business plans. Those components are:

  • Executive Summary: Highlights what will be discussed in your plan and summarizes what your business hopes to accomplish
  • Company Description: Includes key information about your business and the customers that you will serve
  • Competitive Analysis: Who are your competitors, and what are their strengths and weaknesses?
  • Organization & Management: An outline of the setup of your organization and names and summaries of the job responsibilities of your management team
  • Market Analysis: An analysis of your industry now and in the future
  • Marketing Plan: An outline of the marketing strategies you will use to draw clients to your business
  • Financial Projections: Your expectations for future revenue based on market research

Register Your Business

Before you launch your business, you have to register with federal, state, and local agencies. You will need to register your business name with the state in which you operate. In addition, you must register with the Internal Revenue Service to get an Employer Identification Number (EIN) if you ever plan to hire employees. It’s imperative to obtain licenses and permits to operate your business based on state and local regulations. You must register your business if you plan to seek business funding now or in the future — or if want to open a business bank account. Establishing a business is legally required, but it also makes you look more professional and legitimate to your clients.

One important step to take when registering your business is choosing your business structure. Your business structure will be important in determining what you’ll pay in taxes. Your business structure may also offer protection from personal liability for the debts and obligations of your business. The different types of business entities include:

Sole Proprietorships

This structure is the easiest to form and does not require filing with the state. With a sole proprietorship, profits and losses from the business are reported on the business owner’s personal tax return. The major drawback of this business structure is that the business owner – you – are held personally liable for the debts and obligations of the business.

Partnerships

A partnership is established by businesses with two or more owners. There are three common types of partnerships: general partnerships, limited partnerships, and limited liability partnerships.

  • General Partnership (GP): This type of partnership has the fewest ongoing requirements. These are also the easiest to form and don’t require state filing. The drawback is that partners in a GP are personally liable for the debts and obligations of the business.
  • Limited Partnership (LP): In a limited partnership, only the general partner(s) has unlimited liability. The other partners — known as limited partners – have limited liability. This simply means that personal assets can’t be used to cover the debts and liabilities of the business.
  • Limited Liability Partnership (LLP): In a limited liability partnership, all partners have limited liability. However, partners may be held liable for their personal actions. This structure is reserved for professional service businesses.

Limited Liability Companies

A limited liability company, or LLC, is independent of its owners. The personal assets of the owners are kept separate from business debts. An LLC is taxed similarly to sole proprietorships and partnerships.

Corporations

If a corporation is the right structure for your business, there are two options to consider: C corporations and S corporations.

  • C-Corporations: C-corporations are independent of their owners. There is no limit on the number of shareholders in a C-corporation. C-corporations are taxed on shareholder dividends and corporate profits.
  • S-Corporations: An S-corporation is also independent of its owners. Owners report their share of the profits and losses on their own personal income tax returns. There are limitations to the number of shareholders with this structure.

When choosing your business structure, you need to keep a few considerations in mind. If you have multiple owners, a partnership is a good route to take. If you want to protect your personal assets but don’t want a higher tax rate, consider establishing an LLC. If you plan to raise large amounts of capital in the future, a corporation might work best for you. You can learn more about what business structure best fits your needs by consulting with an attorney or accountant.

Get Business Insurance

Do I need business interruption insurance

Business insurance is critical for the protection of your business. From property insurance that protects your office building to liability insurance that safeguards you from lawsuits, there are a few different types of business insurance to consider for your consulting business.

General Liability Insurance

If you operate a brick-and-mortar business, you need general liability insurance. This protects your business in the event that something happens to a client on your property. For example, if a client slips and falls in your office, they could file a lawsuit against you. With general liability insurance, you won’t have to pay all associated costs out-of-pocket.

Professional Liability Insurance

Professional liability insurance is also known as errors and omissions (E&O) insurance. This type of insurance protects you from lawsuits that may be filed by clients. Let’s say that you consult with a client on a project, and the project ultimately ends up failing. The client believes that the failure of the project was your fault and files a lawsuit. If you have E&O insurance, attorney’s fees, settlement expenses, and court costs will be covered up to the full amount of your policy.

Worker’s Compensation

If you have employees, worker’s compensation is another type of insurance your business needs. Worker’s compensation covers the medical expenses, wages, and legal fees of an employee that is injured on the job or suffers a work-related ailment. Most states require all W2 employees to be covered under worker’s compensation insurance, but laws vary by state.

Commercial Property Insurance

If you have a commercial property for your consulting business, consider getting commercial property insurance to protect your assets. This type of insurance protects you from losses that may occur from burglary, fire, or natural disasters.

Separate Personal & Business Expenses

It may be tempting to simply use your own personal bank account and credit cards for your business. Since the business is yours, there’s no harm in mixing your business and personal finances, right?

Actually, the wisest move is to keep your business and personal finances separate. One of the most important reasons for doing this is because it will make filing your taxes much easier. Imagine that the deadline is ticking to file your return with the IRS, and you (or your accountant) are stuck spending hours separating business and personal records. If you’re audited after filing, having separate records for business and personal income/expenses will make the process go much more smoothly.

Keeping your business and personal finances separate is also helpful in limiting your liabilities from creditors. If there is no clear separation between you and the business, creditors could potentially use your personal assets for unpaid debts and obligations, even if your business is structured as a corporation or LLC.

Separation of personal and business expenses is also important for building your business credit. If you’re using your own personal credit cards, you may increase your personal credit score. However, this won’t affect your business credit history. If you plan on applying for business loans in the future, boosting your business credit profile is critical to qualifying for higher loan amounts and the best rates and terms.

The first step to separating your business and personal finances is to open a business checking account. This bank account can be used for depositing money, writing checks to vendors, making online payments, and keeping an eye on the expenses and income of your business. To open an account, you will need your EIN, Social Security Number, business address, and business license. You may also need other documentation, such as a copy of the articles of incorporation on file with your state.

Even though you can keep an eye on your finances through your business bank account, it’s also important to set up a dedicated accounting system for your business. This will allow you to closely keep track of the money coming in and going out of your business. You may opt to hire a bookkeeper for this task, or you can use accounting software to track everything yourself. We’ll go into more details on this type of software a little later.

Finally, you can apply for a business credit card to cover recurring expenses for your business, such as your lease or utility payments. Using and paying off your business credit card responsibly will help strengthen your business credit profile.

Unsure of which card is right for you? Start with these recommendations.

Chase Ink Business Cash

Chase Ink Business Cash


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Annual Fee:

$0

 

Purchase APR:

15.49% – 21.49%, Variable

Required credit: Good, excellent

Bonus offer: $500 cash back if you spend at least $3,000 in the first three months of opening your account

Purchase intro APR: 0% for the first 12 months

Balance transfer intro APR: 0% for the first 12 months

Foreign transaction fee: 3%

Rewards:

  • 5% cash back on the first $25,000 spent in combined purchases at office supply stores and on internet, cable, and phone purchases each account anniversary year
  • 2% cash back on the first $25,000 spent in combined purchases at gas stations and restaurants each account anniversary year
  • 1% cash back on all other purchases

Notable Perks & Benefits: 

  • Employee cards at no additional cost
  • Travel and purchase coverage
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The Chase Ink Business Cash card rewards you just for using your card on business expenses. You can receive 5% cash back on internet, cable, phone services, and purchases from office supply stores. However, this is capped at the first $25,000 spent each anniversary year.

You can also earn 2% back on purchases at gas stations and restaurants. This is also capped at the first $25,000 spent per anniversary year.

For the rest of your purchases, you can take advantage of unlimited 1% cash back rewards. As a new cardholder, you can receive a bonus of $500 cash back if you spend $3,000 within 3 months of opening your account.

This credit card has a 0% introductory APR for the first 12 months. After the introductory period, interest rates are 15.49% to 21.49% based on creditworthiness. There is no annual fee associated with this card.

Additional benefits for Chase Ink Business Cash cardholders include free employee cards, purchase protection, and extended warranty protection. You must have excellent credit to qualify for this credit card.

Spark Cash Select For Business

Spark Cash Select From Capital One

capital one spark cash select
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Annual Fee:

$0

 

Purchase APR:

15.24% – 23.24%, Variable

Required credit: Good, excellent

Bonus offer: $200 cash back if you spend at least $3,000 in the first 3 months of opening your account

Purchase intro APR: 0% for the first 9 months

Balance transfer intro APR: 0% for the first 9 months

Foreign transaction fee: None

Rewards: 

  • Unlimited 1.5% cash back on all purchases

Notable perks & benefits:

  • Rewards can be requested as cash back or applied as statement credits
  • Employee cards at no additional cost
  • Comes with Capital One and Visa business benefits
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Capital One’s Spark Cash Select for Business is designed for borrowers with excellent credit scores. One of the standout features of this card is the unlimited 1.5% cash back you receive just by using your card. You can cash out your rewards at any time.

If you become a new cardmember and spend $3,0000 within the first 3 months of opening your account, you’ll receive a $200 cash bonus.

You’ll also be able to enjoy a 0% introductory APR for the first 9 months. After the introductory period, your APR will be from 15.24% to 23.24% based on creditworthiness. This card does not have an annual fee, and you can receive employee cards at no cost.

Seek Business Funding

One of the best things about setting up your consulting business is that you may be able to get started with very little capital. Ultimately, though, this depends on the goals of your business. For example, if you plan to only consult with clients online, you can work right out of your home office. This eliminates the need for a dedicated commercial office, which comes with expenses such as monthly rent and utility payments.

On the other hand, you might want to open a brick-and-mortar business immediately. This would require more capital from the start. Even if you start small, you may later expand your business by purchasing or leasing a larger building and hiring employees.

Whether you start off big or you plan to grow in the future, you’ll need capital. In some cases, you may be able to use your revenue to fund your expenses and growth. In other instances, you’ll need a financial boost from a business lender.

Fortunately, there are many financing options out there if you know where to look. Let’s explore the types of funding available to you, along with our lender recommendations.

Personal Savings

If you would prefer to not work with a lender, using personal savings is an option available to you. If you use your own money, you don’t have to worry about making payments to a lender. You’ll also save money because you won’t pay interest or fees that are charged by a lender. On the downside, if your business isn’t successful, you risk losing your savings.

Friends & Family

Have a friend or family member with cash to invest? Pitch them your business idea and let them know why investing in you is a great idea. Have your business plan in hand and present your ideas to them just as you would any other lender. If they decide you’re worth the investment, make sure to get everything in writing to protect all parties.

There are two ways to get loans from someone you know. You can choose debt financing, which means that you’ll make payments toward your principal balance plus interest on a regularly scheduled basis, just like a traditional loan. Or you can receive money in exchange for ownership in your business – also known as equity financing. While you won’t have to repay immediately, your friend or family member will collect a share of the profits over time. Depending on your agreement, they may also have some level of control in the decision-making process of your business.

Unsure of which route to take? Learn more about debt vs. equity financing to determine which option is best for your business.

Rollovers As Business Startups (ROBS)

What if there was a way to get the capital you need to start or grow your business without taking on debt? Sounds too good to be true, doesn’t it? But with a rollovers as business startups (ROBS) plan, you can do just that. The only catch? You have to have a qualifying retirement plan.

Early withdrawal of your retirement funds results in penalties. However, a ROBS plan allows you to leverage your funds without having to pay these penalties.

With a ROBS plan, you set up a new C-corporation. Then, you create a retirement plan for your newly created corporation. Next, you roll over funds from your existing retirement plan. These funds can be used to purchase stock in your new business, providing you with the capital you need to start or expand your business.

The best part of a ROBS plan is that you’re using your own funds. This means no debt, no interest or fees, and no repayments to a lender. However, you are putting your retirement funds at risk if your business fails.

Recommended Option: Guidant Financial

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  • Time in business: Unknown
  • Credit utilization: Less than 50%
  • Credit score: 690+
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Many small business owners that get capital through a ROBS plan hire a ROBS provider to do the heavy lifting. Guidant Financial is a ROBS provider that can help you get started.

To set up a ROBS plan with Guidant Financial, you need to have a retirement plan or pension account with at least $50,000. Most plans qualify, including:

  • 401(k)
  • 403(b)
  • Traditional IRA
  • Keogh
  • TSP
  • SEP

Guidant Financial can help you roll over up to 100% of your account balance. In addition to having a qualifying plan, you must also meet these requirements:

  • Must be an employee of the business
  • Must have a business to fund

You can use your funds for any business purpose, whether you’re buying an existing business, funding startup costs, or paying expenses related to expansion.

To get started, you must pay a $4,995 startup fee. Since this isn’t a loan, you won’t have to make debt repayments. However, you will have to pay a monthly administration fee.

If you don’t qualify for a ROBS plan or you’re seeking other types of funding, Guidant Financial offers other options including Small Business Administration (SBA) loans, unsecured business loans, and equipment leases.

Lines Of Credit

A line of credit is one of the most flexible forms of financing. This is a type of revolving credit (similar to a credit card) that allows you to make multiple draws. As you repay your principal balance (plus fees and interest), funds will become available to use again. Fees and interest are only charged on the borrowed portion of funds.

With your line of credit, you can initiate draws as needed. Once you draw funds, they’ll be transferred to your bank account and are available to use in 1 to 3 business days in most cases.

You can spend up to and including the credit limit set by your lender. Most lines of credit can be used for any business purpose but are particularly useful for unexpected expenses, filling revenue gaps, or covering extra expenses due to a seasonal increase in business.

Recommended Option: Fundbox

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  • No time in business requirements, but must have used a compatible accounting or invoicing software for at least 2 months, or a compatible business bank account for at least 3 months.
  • Business revenue: $50,000 per year
  • No specific personal credit score requirement
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Fundbox is a lender that has lines of credit up to $100,000 for qualified small business owners. The lender charges set draw fees starting at 4.66% of the borrowing amount. You can choose to repay Fundbox over terms of 12 or 24 weeks, and payments are automatically deducted from your linked business checking account.

You can be approved instantly and put your line of credit to work for you immediately. Once you initiate a draw from your account, funds will hit your bank account within 1 to 3 business days.

Qualifying for a Fundbox line of credit is easy. The minimum requirements are:

  • Must have a business checking account
  • Must have a U.S.-based business
  • At least 2 months of activity in accounting software or at least 3 months of transactions in your business bank account
  • At least $50,000 in annual revenue

Your credit limit will be based on the performance of your business.

Equipment Loans

Whether your consulting business is home-based or you operate out of a commercial property, you will need some equipment to get started. Some equipment you may need for your business includes a computer, printer, office furniture, and computer software. If you don’t have the funds available in your bank account, consider applying for equipment financing.

Equipment financing is a type of funding used to purchase equipment, furniture, and fixtures for your business. Equipment loans can also be used to purchase a commercial vehicle if one is needed to drive to meet your clients if you don’t want to take out an auto loan. There are two types of equipment financing available: equipment loans and equipment leases.

With an equipment loan, you’ll make regularly scheduled payments to a lender over a set period of time, such as five years. Each payment will be applied to the principal – the amount you borrowed – as well as fees and interest charged by the lender. Once you’ve made all payments as scheduled, the equipment belongs to you. You can continue to put the equipment into use or sell it.

With equipment leases, you also make scheduled payments to a lender. However, your lease terms are typically a few years shorter. Once you’ve made all scheduled payments, you return the equipment and sign a new lease for new equipment. You never truly own the equipment, but this is a good option for anyone that wants to update their equipment every few years.

Recommended Option: Lendio

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  • Time in business: 6 months
  • Business revenue: $10,000 per month
  • Personal credit score: 550
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Lendio isn’t a direct lender. Instead, it’s a loan aggregator that can connect you with its financing partners to help you get the best financing offer for your situation.

One of the financial products offered through Lendio is equipment financing. You may qualify for funding of $5,000 to $5 million for the purchase of your equipment. Loan terms are 1 to 5 years with interest rates starting at 7.5%.

Your funds can be used for almost any equipment purchase, including software, furniture and fixtures, and even appliances and HVAC units for your office.

To qualify, you must meet these minimum requirements:

  • Time in business of at least 12 months
  • At least $50,000 in annual revenue
  • Personal credit score of 650 or above

If you don’t meet these requirements, Lendio may still have an option for you. Just fill out a quick application to find out what you can qualify to receive. Lendio also offers additional financial solutions, including SBA loans, lines of credit, term loans, and startup loans.

Personal Loans For Business

If you’re a brand-new business, you may not qualify for other financing options. This is because lenders look at annual revenue, business credit profile, and your time in business to determine if you’re a risky borrower. If you don’t meet these qualifications, you won’t be able to get affordable small business funding.

However, there is an alternative solution. You can apply for a personal loan to use for business purposes. With this type of financing, a lender considers your personal credit history and income to determine if you qualify.

In most cases, you can use a personal loan for business for any purpose, from purchasing needed equipment to hiring new employees, using as working capital, or paying startup costs.

Recommended Option: Upstart

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  • Time in business: N/A
  • Personal credit score: Minimum 620
  • Business revenue: N/A
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Upstart personal loans are available in amounts from $1,000 to $50,000. APRs range from 7.54% to 35.99%. Repayment terms are 3 or 5 years.

Upstart’s lending partners consider more than just your credit score when determining whether to approve your loan. Your years of credit, education, area of study, and job history are also considered during the application process.

To qualify for an Upstart personal loan, you must have:

  • Personal credit score of 620 or above
  • Solid debt-to-income ratio
  • No bankruptcies or public records
  • No delinquent accounts or accounts in collections
  • Less than 6 inquiries in the last 6 months

Business Credit Cards

We’ve already discussed business credit cards earlier as part of keeping your business and personal accounts separate. Business credit cards are great to have on-hand for unexpected expenses or recurring expenses for your business.

You can even score rewards just for using your credit card. Look for a rewards card that offers cash back or points to use toward perks like travel to get the most out of your card.

Recommended Option: Spark Classic

Spark Classic From Capital One

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Annual Fee:

$0

 

Purchase APR:

25.24%, Variable

Required credit: Fair

Bonus offer: None

Purchase intro APR: N/A

Balance transfer intro APR: N/A

Foreign transaction fee: None

Rewards:

  • Unlimited 1% cash back on all purchases

Notable perks & benefits:

  • Free employee cards
  • Fraud coverage and alerts
  • Capital One and Visa business benefits
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Capital One’s Spark Classic for Business card is available to business owners with average credit. This card offers a 25.24% variable APR and no annual fee. Using your card responsibly helps build your business credit profile so you can qualify for other cards and financing offers in the future.

You can earn unlimited 1% cash back on all purchases with no minimum required to redeem. Other benefits include fraud coverage and alerts and employee cards at no additional cost.

Choose Business Software

card-not-present online shopping

Choosing the right business software can help you run your consulting business more efficiently. The first type of software you should invest in is accounting software or an online bookkeeping system. This allows you to keep track of your income and expenses, run financial reports, send invoices, and access your financials for tax purposes. As your business grows, you may opt to hire a bookkeeper or accountant, but in the beginning, you may be able to tackle this task yourself using the right accounting software.

New to accounting? Download our free ebook, The Beginner’s Guide to Accounting, to get a handle on the basics.

You’ll also need software that’s used for managing clients — from keeping updated contact information all in one place to setting and tracking appointments. There are programs designed specifically for consultants that offer client management, project management, tasks, and other features.

To accept payments other than cash, you’ll also need payment processing software. This software communicates between your bank and the bank of your client, allowing you to accept debit cards, credit cards, and other forms of payment. If your business is going to be based solely online, you can sign up for an online payment solution.

Finally, if you plan to do online consulting, you must invest in video conferencing software. There are multiple options available — some at no cost and others that charge a monthly fee.

Set Your Rates

In order for your business to be successful, you have to have revenue. Without revenue, you won’t be able to pay your expenses or the salaries of yourself or your employees. Without revenue, you also won’t be able to grow your business.

To make sure your business is successful and profitable, you need to set your rates. This can be a balancing act for most consultants. If you set your rates too high, it may scare away potential clients. If you shortchange yourself and set your rates too low, clients may not take you seriously or you might not bring in enough revenue to cover your expenses.

To set your rates, first decide how your pay structure will look. You have three options: per project, hourly rates, and retainers.

If you charge per project, you will need to figure out how long the project will be, what expenses may be incurred, and other factors. You may choose to bill for the entire project or break it down into monthly payments.

You can also charge an hourly rate. Take a look at your expenses and determine how much you would need to charge to be profitable. Also, be aware that the higher your rate is, the more your clients will expect from you. If you have the credentials, training, and education to justify charging $500 per hour, your clients will have high expectations of what you’ll provide.

Finally, you can also work on a retainer basis. With a retainer, you will work a specific number of hours for one set monthly fee.

When calculating your rates, make sure to list all of the expenses of your business. You will need to make at least enough revenue to cover these costs.

You also need to find out what your competitors are charging for their services. You can do this by going online to their websites, checking out their brochures, or making a quick phone call. Unless you have an obvious advantage over other consultants in your area, you want to make sure that your fees are competitive.

Bolster Your Web Presence

webbased

Prospective clients are going to have a difficult time finding you if you don’t have a web presence. This doesn’t mean that you have to invest thousands of dollars in setting up a fancy new website. However, you do need to have at least a basic website and social media profiles to provide clients with critical information about your business.

You can get started by setting up free social media pages on sites including Facebook and Twitter. Your pages should include your contact information, the services you offer, and office hours. As your business grows, you can post news and updates, videos, photos, and other media to draw in clients.

You also need to set up a company website. You could pay a web designer, but at this stage, you can certainly tackle the task yourself. Easy website builders make it simple to set up your website in just minutes, even if you’ve never created a website before. Make sure that you include your contact information, areas served, and the services you offer. If you have any credentials or training, add that information to your website, as well.

Later, you can add additional features to your website, such as videos, online appointment scheduling, and client testimonials.

If you want to learn more tips and tricks, check out our article on creating and maintaining your online presence.

Market Your Business

business loans for HVAC

Building your web presence is one way to get your name out to the public, but you should also implement a marketing and advertising campaign to further boost your business. The strategy you choose is based on a number of factors, including your marketing budget and your goals for the campaign.

One great way to market your business is through Facebook ads. You can easily set your budget and select your target audience. It only takes a few minutes to get your Facebook ads up and running. Learn more about social media marketing for your business.

Another advertising method you can use is a newsletter. Your newsletter doesn’t need an over-the-top design. Instead, a simple newsletter with important information is most effective. Use your newsletter to discuss current industry trends, current news about your business, and other relevant information. You can send a physical newsletter by mail, but this comes with costs including paper and envelopes, printing, and postage. A more affordable option is to offer an email newsletter. Make sure to include a sign-up option on your website and social media pages.

Another idea is to print up brochures for your business. Your brochure should include your services, your value proposition, the industries you serve, and biographical information, such as your credentials or training.

You can also take your knowledge and leverage it as a guest speaker at an event. You can speak at dinners, luncheons, and other functions for industry events or service organizations. If you don’t want to be a public speaker, you can attend industry events and network with potential clients. Networking is key to running a successful consulting business.

Cold-calling is also a way to attract new clients. Prepare your script before calling local businesses that could use your services. The goal of cold-calling is to get a meeting with the decisionmaker to sell yourself and your services to gain a new client.

Finally, word-of-mouth advertising is one of the easiest ways to bring in business. Satisfied clients that tell their friends, family, and colleagues about you or who take the time to write a referral or testimonial that you can use on your website can help drive more clients to your business.

Final Thoughts

Sharing your knowledge and expertise with others can be extremely lucrative if you know how to set up your consulting business. With careful planning — selecting your niche, setting your fees, and effectively marketing your business — you’ll have a better chance of reaching new clients and meeting your financial goals. Good luck!

The post How To Start And Fund A Consulting Business: The Step-By-Step Guide appeared first on Merchant Maverick.

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How to Accept Online Payments With Square

When you are ready to start selling online, Square (read our review) offers a wide variety of options depending on your skill level and needs. For example, if time is of the essence or you don’t want to fuss with code, build a free online store from Square’s templates and get up and running by the end of the day.

Already have a site? Choose a plugin integration from the Square Dashboard that solves your problem — without the need for code.

But those aren’t all of your options. If you do have developer expertise, you can build your checkout flow with Square Transactions API and start accepting all major credit cards with digital wallet support, too.  Square Checkout is yet another developer option that requires less coding with a pre-built payment form and digital wallet support.

In this post, we’ll explore each path so that you can get the facts and navigate to the choices right for you. Before you know it, you’ll have launched your own online store and can move on to more exciting business matters.

Note: If you’re also curious about in-store payments, check out our related post, How To Use Square To Accept Credit Cards In Person.

Webstore Integrations Developers

Build Your Webstore Quickly & Easily

Integrate With Popular eCommerce Software

Developer-Friendly Tools For Customization

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Highlights:

  • No coding required
  • Free personalized URL
  • Premade customizable themes
  • No hosting fees
  • Manage from your Dashboard
  • Mobile-ready storefront
  • Integrate with your in-person store

Integrate with:

  • WooCommerce
  • BigCommerce
  • Ecwid
  • 3dcart
  • OpenCart
  • Zen Cart
  • Weebly
  • WordPress.com
  • Wix
  • +More

Highlights:

  • API for custom solutions
  • In-person solutions
  • Online solutions
  • Card reader SDK
  • Customer management solutions
  • PCI and EMV compliance
  • End-to-end encryption
  • Dispute management
  • Fraud detection

Instant Account Setup

Fast Funding

No Monthly Fees

2.90% + $0.30 for online sales

Instant Account Setup

Fast Funding

No Monthly Fees

2.90% + $0.30 for online sales

Instant Account Setup

Fast Funding

No Monthly Fees

2.90% + $0.30 for online sales

How Much Does Square Charge For Online Payments?

The cost question can be a very loaded one when it comes to payment processing. The great news is that Square offers a transparent pricing model.

To process credit cards online with Square, you’ll pay 2.9% + $0.30 per transaction. The significant thing to note is that this flat fee encompasses much more than is typical with traditional merchant accounts. For instance, you don’t need to worry about a payment gateway (and the expenses that go with it) when you process through Square. Read on below to learn the differences between Square and a traditional merchant account — and why they matter.

Traditional Merchant Account Vs. Square

Square’s hardware and services encompass an end-to-end processing system that captures payment information and encrypts it through the payment chain with no need for a separate payment gateway.

What this means for you is cost-savings compared to a traditional merchant account. You won’t be paying initial set-up fees, PCI compliance fees, monthly account fees, batch fees, or higher rates for processing cards like American Express. Square also doesn’t assess any chargeback fees and offers merchants up to $250/month in chargeback protection. All of this is a pretty big deal because Square spares business owners from the laundry list of itemized charges that can come with traditional merchant accounts.

So if Square isn’t a traditional merchant account, what is it? Square is a third party processor. This means that instead of opening a merchant account directly, you are basically a sub-user on Square’s giant merchant account, along with all of Square’s other customers. Square acts as a payment processor and also assumes the financial risk associated with your business to do so. The whole premise behind Square is that it makes setting up a shop very easy for the busy entrepreneur. In fact, you can get an account set up and running to take payment the very same day. The Square sign-up process doesn’t even require a credit check!

While you don’t need to jump through a lot of hoops to open up an account with Square (as you would working directly with a bank), Square is more apt to terminate or put a hold on an account if certain red flags are raised. While the overwhelming majority of businesses will never have a problem with an account hold, it can be disconcerting if it happens to you. Check out our post How to Avoid Merchant Account Holds, Freezes, and Terminations to find out more. Again, most merchants will likely never have to face this issue, but it helps to cover your bases.

Now that we have covered Square Payments as a third party processor and the cost of processing, let’s dig into Square’s offerings when it comes to going live and selling online.

Option 1: Build A Free Square Online Store

Square Store Template

As I said in the introduction, you can get a free Square store up and running today with no technical expertise needed. This whole process is powered by Square Payments and Weebly (read our review). After creating a Square account, you can go back into your dashboard and select “Online Store” in the menu. Then, Square leads you through the process of selecting the categories that most closely apply to your business. You’ll get a suggested template, but you can choose a different one if you fancy another one better. You can also add your logo, choose from limited fonts, and have some color choices, but overall the design freedom here is limited to the template itself.

Again, for being free, there isn’t much to complain about. A Square store is the simplest solution to get your shop up and running. All you need to do is add your products — your eCommerce shop syncs with Square POS and all of the other Square software and tools. Your inventory automatically updates when you sell an item, too.

One potential drawback to the freemium option, however, is that you are bound to the Weebly logo in your domain name and the footer of your website, and your shipping options are minimal. The screenshot below shows the shipping options available when setting up the free Square store with Weebly. Note that you must upgrade your Weebly plan to calculate real-time shipping rates:

Square Free Store Shipping Setup

If you want a bit more customization and dynamic shipping calculations (among other upgrades), you can purchase a domain and upgrade to a professional or premium account through Weebly.

Square Online Store Upgrade Options

Square and Weebly

The free online store option, although robust in its own way, limits you a bit. As you can see from above, for example, if your company relies heavily on shipping items with large size or weight ranges, it may be worth it to you to go to the Premium eCommerce plan for the real-time shipping rate calculator and accurate rates for UPS, FedEx, or other third party carriers.

The free store also has a 500 MB storage space limit, which could limit the number of photos on your site. The paid tiers give you a considerable upgrade with unlimited space, along with website analytics and insights.

As far as accepting payment goes, you can accept all major credit cards. Digital wallets like Apple Pay are not supported at this time, but I suspect they will be soon. For more about the pros and cons of this solution, check out our Square Online Store and eCommerce Review.

Option 2: Connect Square To An eCommerce Platform

Square eCommerce Apps

Whether you already have your site up and running or you are building your site from the ground up (or somewhere in between), you can probably find what you need in the Square App Marketplace. Square integrates with many eCommerce platforms, including:

  • 3dcart (read our review)
  • Wix (read our review)
  • BigCommerce (read our review)
  • WooCommerce (read our review)
  • Ecwid (read our review)

And of course — let’s not forget that Square also integrates with Weebly, as well as WordPress and WP EasyCart.

On the topic of app integrations and Square, it’s worth noting that Square can easily integrate with a range of different types of apps that you can shop for right from your dashboard. You can find everything from accounting to invoicing, employee management, loyalty and rewards, and marketing, to name a few. Pricing depends entirely on the apps themselves, but the Square App Marketplace is set up to compare costs easily.

All of Square’s basic eCommerce features integrate with these apps, so you’ll be able to enjoy the same payment processing rates, security protection, and inventory updates as you sell. Of course, each app platform has specific features and benefits, so the finished product (and look) varies depending on the integrated solution you choose. Check out The Best eCommerce Integrations That Work With Square Payments for our top picks!

Option 3: Build Your Own Checkout With Square APIs

If you already have your own site and you have developer expertise, then you have two more options thanks to Square API: Square Checkout and Transactions API. The most significant difference between the two is that Square Checkout is much closer to an out-of-the-box solution. With Square Checkout, Square is actually hosting the payment form, and the UI is already done for you. If you want more freedom in the checkout and payment UI and you want to host the payment form on your site with customized branding, you can opt for Square Transactions API.

Here is a handy side-by-side comparison chart to give you an overview of what you can expect with each solution. Note: All Square APIs and SDKs are free to use. As always, you pay only the payment processing fees.

Square Checkout Feature Square Transactions API
Yes Requires Developer Support Yes
No Can Customize Yes
Yes Square Hosted No (You host)
Yes Store Customer Data Yes (With integration)
No Card on File & Recurring Payments Yes (With integration)
Yes (Customer data
& itemization)		 Detailed Dashboard Reports No (Transaction
amount only)
Recommended,
not required		 SSL Needed Yes, with
separate integration
Yes Eligible for Chargeback Protection Yes (with conditions)
Yes Data Encryption Yes
Yes PCI Compliance Included Yes
Yes Itemization Yes, with Orders API
No Dynamic Shipping Calculations No
Yes Accept Google Pay Yes
Yes Accept Apple Pay Yes
No Accept MasterPass Yes
Yes Accept All Major Credit Cards Yes
Yes Inventory Syncing Yes, with Inventory API

The choice between Square API and Transactions API largely depends on your particular needs and what you find most important in the customer journey.

Other Ways To Accept Online Payments With Square

Square Developer In-App

Though we have explored several options in Square payments, there are yet a few more to keep in mind. Before we go on, it’s worth mentioning that you can’t add an embeddable “Buy Now” button to any site like you can with PayPal or even Shopify. However, there are still ways to take payments online — even without a website! Let’s check out the last two ways you can take payments via Square from your customer online — through invoices and in-app payments.

Invoices

Square Invoices

You don’t need an online store to send and collect payment from your customers if you use invoices. Square allows you to send one-off invoices for single orders, or to set up recurring invoices for subscriptions or even installments. It’s easy to track the status of invoices and follow up right from your Square Dashboard, too. Want more info on invoices? Check out How To Use Square Invoices To Ensure You Get Paid On Time so you can leverage this option for your business.

In-App Payments

With all the cash being exchanged through in-app purchases, it was only a matter of time before Square decided to join the party. That’s right; now Square offers in-app payment support with a few lines of code! You can update elements to match your app’s style and have the freedom to customize the look and feel however you want. It’s all in Square’s Transaction APIs and completely free for you to use with your Square account.

Is Square Online Payments Right For You?

Square offers solutions for both the tech-savvy and those who want something ready to run out of the box. With that being said, the more appropriate question is, “Which of Square Online Payment solutions are right for you?” And that answer comes down to your needs. From a quick-to-set up Square Store to Transaction APIs that are customizable and free to us, or plug-ins apps that add eCommerce to your existing site, there are many solutions to choose.

Keep in mind that you can add or subtract Square’s services and other integrations to scale up or down with you as needed, so you don’t have to make a final decision today. Setting up a Square account is the first step to get the ball rolling and see the options along the way. With no sign-up fees, binding contracts, or credit checks, Square is one of the least intimating companies to deal with if you are just checking things out.

The post How to Accept Online Payments With Square appeared first on Merchant Maverick.

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Types Of Business Structures: The Complete Guide

If you’re starting your own business, one of the first steps is choosing a business structure. The legal structure of your business determines how much you pay in taxes, paperwork requirements for your business, your ability to raise money, and your personal liability for the debts and obligations of your business.

Every business is different, so the legal structure you choose should be based on the specific needs and goals of your business. The best option for one business may not be best for you, even if you’re in the same industry.

Before you make your choice, the first thing on your to-do list should be to have an understanding of the characteristics of each business structure. In this article, we’ll break down different business structures and the benefits and drawbacks of each to help you make the most informed decision for your business.

Sole Proprietorship

A sole proprietorship is the most basic business structure. A sole proprietorship is an unincorporated business that is owned and operated by one person. If you engage in business activities, you are legally considered a sole proprietor. There is no need to formally register your business. However, depending on the type of business you own, you may still be required to get the state and local licenses and permits needed to legally operate your business.

Under a sole proprietorship, you may operate under your own name or a fictitious name — also known as a trade name. This trade name does not create a legal entity separate from the owner.

The owner of the sole proprietorship records the income and losses of the business on their personal tax return by filing a Schedule C form. Sole proprietors also file a Schedule SE for paying self-employment tax. These forms are filed with the standard Form 1040.

Many small business owners choose to operate as sole proprietors because of how quick, easy, and inexpensive it is to get started. However, this type of legal structure isn’t without its drawbacks.

One of the biggest downsides is that a sole proprietorship is not a separate legal entity. In fact, it is indistinguishable from its owner. This means that the business owner can be held personally liable for the debts and obligations of the business. If your business is sued for negligence, for example, your personal assets — such as your bank account and personal real estate — could be at risk. If you default on a business loan, your personal assets could be seized to repay the debt.

Sole proprietorships are best for low-risk businesses. Some entrepreneurs start off as a sole proprietorship when testing out a business idea before reorganizing under another business structure. Most commonly, sole proprietorships are selected by service professionals, freelancers, and consultants.

Pros & Cons Of Sole Proprietorships

Is a sole proprietorship right for your business? Consider these pros and cons before deciding.

Pros

  • Easy & Inexpensive: There are no costly fees associated with setting up a sole proprietorship. In fact, you don’t even have to register at all. Simply buying and selling goods or performing other business activities classifies your business as a sole proprietorship.
  • No Ongoing Requirements: Unlike other business structures, a sole proprietorship does not have requirements such as meetings or voting.
  • Simplified Taxes: You do not have to file a separate tax return for your sole proprietorship. Instead, you simply attach your Schedule C and Schedule SE to your personal income tax return. You will also have your earnings taxed just once, and you can write off your business losses on your personal return.

Cons

  • Unlimited Personal Liability: As a sole proprietor, you would be responsible for the debts, obligations, and liabilities of your business. Your personal assets could be put at risk, and lawsuits can be filed against you.
  • Financing Difficulties: Getting extra capital when you need it can be difficult as a sole proprietor. Banks, credit unions, and even some alternative lenders are hesitant to loan money to sole proprietors. You also will be unable to sell stock to raise money.

Partnership

Businesses that have two or more owners may consider forming a partnership because it is quick, easy, and inexpensive. A partnership is the simplest business structure for businesses that have multiple owners. Like a sole proprietorship, you are not required to register your partnership. Simply coming to an agreement with other owners and engaging in business activities is enough to establish a partnership. However, you may still be required to obtain the appropriate licenses and permits required to legally operate your business. You may also be required to register your partnership with your state depending on the type of partnership you form.

When it’s tax time, a Form 1065 is filed with the IRS to report income, losses, gains, deductions, and credits. The partnership does not directly pay income taxes, but instead, “passes through” profits and losses to each partner, who report this information on their personal tax returns. Profits or losses are recorded on a Schedule K-1, which is filed with personal tax returns. All partners are also required to pay self-employment tax based on their share of the company’s profits.

Before establishing a partnership, it’s always important to ensure the right partners are selected. Disagreements between partners can hinder business growth and even be the downfall of a business.

While any business with two or more owners can form a partnership, this business structure is best for low-risk businesses and professional groups. Like sole proprietorships, this structure is also a good way to test out a new business idea. If the business is successful, owners may take the next step to growth by reorganizing as a corporation.

Types Of Partnerships

We’ve established the basic definition of a partnership. However, there are three different kinds of partnership to consider. The primary difference between the three lies in the personal liability of each partner.

General Partnership

In a general partnership (GP), all owners are considered general partners. Each partner manages the business and is an active participant in day-to-day operations. Each partner is also personally liable for the debts, obligations, and liabilities of the partnership.

Limited Partnership

With a limited partnership (LP), there is one general partner that is responsible for managing the business and overseeing day-to-day operations. The remaining partners are limited partners that do not participate in managing the business and have limited control. These partners are investors only and are commonly known as “silent partners.” In this type of partnership, only the general partner can be held personally liable for the debts, obligations, and liabilities of the business.

Limited Liability Partnership

A limited liability partnership (LLP) is made up of limited partners. Partners are not personally liable for the debts, obligations, and liabilities of the business. Partners will also not be held personally responsible for the actions of another partner.

Pros & Cons Of Business Partnerships

With the right people, a partnership can be very successful. There are several benefits to forming a partnership. Before you get started, though, it’s also important to understand the risks and drawbacks associated with this business entity.

Pros

  • Minimum Requirements For GPs: General partnerships have minimum requirements and do not require filing with the state. Partnerships are also not subject to the same requirements as corporations, such as holding meetings, recording meeting minutes, and establishing bylaws.
  • Tax Requirements: Partnerships are not required to pay taxes on income, and partners can report their share of profits or losses on their personal income tax returns. Business losses can also be deducted on personal tax returns.
  • Raising Capital For LPs & LLPs: Businesses that choose to form an LP or LLP may be able to raise capital from their investors.

Cons

  • Personal Liability: General partners are personally liable for the debts, obligations, and liabilities of the business. Each partner may also be held accountable for the actions of other partners.
  • Financing Challenges For GPs: General partnerships may have difficulties getting loans or other types of business financing if the business is not a registered entity.
  • Costs: While forming a general partnership is easy and inexpensive, forming a limited partnership or limited liability partnership may be more expensive and requires filing with the state.

Corporation

A corporation is the most expensive and complicated business structure. If you plan to raise capital through the sale of common or preferred stock, your business will need to be set up as a corporation.

There are no limitations on how long a corporation can exist. If an owner dies or retires, the corporation does not have to be dissolved.

Corporations are independent legal entities and are separate from their owners. The good news is that this provides the owners with the best liability protection. The bad news is that there are more regulations and tax requirements for this type of legal structure. Most corporations hire an attorney to ensure the corporation is set up and maintained according to state regulations.

Depending on the type of corporation, double taxation may also be a concern. This means that corporations pay federal and state corporate income tax, while shareholders also report dividends on their personal tax returns. Many corporations enlist an accountant and/or tax preparer to ensure returns are filed correctly, which adds an additional business expense.

Types Of Corporations

If you plan to grow your business in the future and want to raise large amounts of capital to fund that growth, a corporation could be the best legal structure for your business. Before you make that decision, though, there are a few different types of corporations. Let’s explore the differences between each type.

C-corporation

A C-corporation, or C-corp, is your basic corporation. This business entity is completely independent of its owners. With a C-corp, owners have the best protection from personal liability. C-corps can raise capital through the sale of stock and make profits, but double taxation, higher costs associated with formation, and more legal requirements are drawbacks of this business structure.

S-corporation

An S-corporation, or S-corp, is different from a C-corp because it is used to avoid double taxation. Profits and losses of the business can be passed through to the personal tax returns of the owners without being subject to corporate tax rates. To form an S-corp, a filing with the IRS is required.

Another way that an S-corp differs from a C-corp is that there is a limit on the number of shareholders. An S-corp may only have up to 100 shareholders, which could limit the amount of capital raised by the business.

B-corporation

A B-corporation, or B-corp, is similar to a C-corp in how it is taxed. However, a B-corp must offer a benefit to the public in addition to making a profit. In some states, an annual report must be filed to prove that the company is providing a benefit to the public.

Close Corporation

A close corporation is similar to a B-corp but is a structure typically used by smaller businesses. Close corporations are generally prohibited from public trading. Shareholders run this type of corporation, and a board of directors is not required.

Pros & Cons Of Corporations

There are big benefits that come along with forming a corporation, but like other entities, there are also negative aspects to consider before choosing a corporation as your business structure.

Pros

  • Ability To Raise Capital: Corporations give you the biggest opportunities for raising large amounts of capital through the sale of stock.
  • Limited Personal Liability: Corporations offer the most protection against personal liability for shareholders.
  • Some Tax Benefits: C-corporations offer more tax deductions than other business entities, as well as lower self-employment taxes. S-corporations also offer the additional benefit of no corporate tax rates or double taxation.

Cons

  • Higher Cost To Form: It is more expensive to form a corporation than any other business structure.
  • More Requirements: Corporations have more ongoing requirements, including holding meetings, recording meeting minutes, and establishing bylaws.
  • Shareholder Restrictions: The number of shareholders is restricted to 100 or less if you create an S-corp.
  • Higher Taxes: C-corps face double taxation. Business losses also can’t be deducted on personal income tax returns.

Limited Liability Company (LLC)

Business owners that want the best of both worlds may consider forming a limited liability company, also known as an LLC. An LLC combines the benefits of other business entities to keep taxes and business requirements lower than corporations while also offering personal liability protection for its owners. All members of the LLC can fully participate in the operations of the business.

LLCs must be registered with the secretary of state in the state where the business will operate. In some states, an operating agreement will also need to be filed.

In an LLC, owners have limited liability, in most cases protecting their personal assets from being taken to pay off business debts and obligations, just like a corporation. Personal assets will also be protected in the event that the business files for bankruptcy.

Owners can select how an LLC is taxed by the Internal Revenue Service. LLCs can be taxed like a corporation, or the profits and losses can be passed through to the LLC members and filed on personal tax returns. Members must file a Form SE to pay self-employment taxes.

An LLC is best for any business that wants to protect the personal assets of its members. It’s also a good choice for businesses that want the benefits of a corporation without paying corporate tax rates.

Pros & Cons Of LLCs

Will forming an LLC best meet the needs of your business? Only you can answer this question, but make sure to fully evaluate the pros and cons of forming an LLC before making your decision.

Pros

  • Limited Liability: One of the biggest benefits of an LLC is that all members have limited liability, meaning personal assets aren’t at risk in most cases.
  • Tax Benefits: With an LLC, you have the option to choose how your business is taxed.
  • Fewer Requirements: There is less paperwork and fewer ongoing requirements for an LLC when compared to a corporation.
  • No Shareholder Limits: An LLC has no limits to its number of shareholders.

Cons

  • Expensive & Time-Consuming To Set Up: Because you will have to register with the state where you conduct operations, setting up an LLC is more expensive and time-consuming than forming an entity like a general partnership or sole proprietorship. You may also need to hire an accountant to help ensure you’re complying with the rules and regulations of your state — adding an additional expense to your list.
  • Limited Life: If a member quits, dies, or retires, the LLC may be dissolved. Some states even have laws in place that require an LLC to dissolve after a set number of years.

Nonprofit

Most businesses have one primary goal: to make a profit. One business structure is the exception: nonprofits. A nonprofit — or 501(c)(3) — is a business that is beneficial to the public.

Nonprofit corporations follow a set of rules and regulations similar to other types of corporations. However, nonprofits also have additional rules governing how profits are used. For example, profits can’t be distributed to members of the corporation.

Another difference between nonprofits and other corporations is that this type of business entity may be exempt from state and federal income taxes. However, nonprofits must register with the IRS to receive this exemption, in addition to registering with the state.

Religious, educational, literary, and scientific organizations may be eligible for nonprofit status. Charities are also businesses that are formed as nonprofits.

Pros & Cons Of Nonprofits

If the goal of your business is to benefit the public, a nonprofit structure may be the right choice for you. However, if your goal is to make a profit, consider choosing another business structure. Before you make your decision, weigh out these pros and cons:

Pros

  • Tax Exemption: Qualifying organizations may be exempt from paying corporate income tax, as well as state and local taxes.
  • Tax Deductions: Charitable contributions by a nonprofit may be tax-deductible.
  • Limited Liability: All founders, directors, employees, and members of the nonprofit are not liable for the debts and obligations of the nonprofits … in most cases. There are, however, some exceptions, such as when the organization is engaged in illegal activity.
  • Grant Opportunities: Nonprofits may be eligible for public and private grants not available to for-profit businesses.

Cons

  • Paperwork Requirements: Nonprofits must submit annual reports to state agencies and the IRS in order to maintain tax-exempt status.
  • Costs: Starting a nonprofit can be expensive in terms of time and money. Nonprofits must pay fees, and most organizations opt to hire attorneys, accountants, and/or consultants to make sure records are kept up-to-date and all regulations are followed.
  • Stricter Policies: In addition to following state laws and regulations, nonprofits are also required to follow their own bylaws and articles of incorporation.

Cooperative

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A cooperative, or co-op, is a type of business that operates for the benefit of its members. Members of a co-op are known as user-owners and have the right to vote on important decisions surrounding the growth and direction of the business. Officers and a board of directors are responsible for running the co-op.

Any type of business can become a cooperative if the goal of the business is to benefit the user-owners. Businesses that aim to sell their products or services to consumers for a profit would be better suited to form another type of business entity.

Pros & Cons Of Cooperatives

If you’ve thought about your goals and you think a cooperative may work for your business, read through these pros and cons before you make your final decision.

Pros

  • Everyone Has A Voice: Member-owners get to weigh in on key issues and decisions of the business. Regardless of how many shares a member-owner holds, all votes are weighed equally.
  • Member Investments: Member-owners buy into a cooperative, providing a source of capital that can be used for operational expenses or expanding the business.

Cons

  • Funding Challenges: Finding startup loans and other types of funding through traditional lenders may be difficult. Cooperatives have to get creative with other funding sources, such as launching a crowdfunding campaign or applying for small business grants.
  • Slow Decision-Making: Voting and making decisions can be a lengthy process. This can put the cooperative at a disadvantage if a critical decision must be made immediately.

Final Thoughts

Ultimately, the type of business structure you select is based on the current and future goals of your business. You should consider the long term plan before choosing your business structure. While you can always reorganize if needed, this process can be lengthy and expensive. If you’re still having difficulties choosing the right business structure, consider consulting with an accountant, business consultant, and/or attorney to weigh out the pros and cons of each and make the decision that’s best for your business. Once you’re ready to your business off the ground, check out our beginner guides for business to get started on the right track.

The post Types Of Business Structures: The Complete Guide appeared first on Merchant Maverick.

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How To Start And Fund A T-Shirt Business

In the world of fashion, trends come and go, but a few select pieces stand the test of time. One piece of clothing that’s found in almost any wardrobe is the t-shirt. From comfy shirts made for the gym to shirts with trendy designs worn for a night out with friends, t-shirts are a staple for men, women, and children.

T-shirts are here to stay, so why not capitalize on this fashion staple? Whether you have a degree in fashion design or you just want to become an entrepreneur, starting your own t-shirt business could be the opportunity you’ve been looking for.

In this guide, we’ll take a look at what it takes to get your own t-shirt business off the ground. We’ll start with basics such as designing and printing your shirts. We’ll discuss the importance of registering your business. Then, we’ll look at startup costs, as well as how you can get the capital you need to start your business and keep it operating. Finally, we’ll look at ways you can advertise your business to bring in customers and revenue.

Ready to take the leap into entrepreneurship? Read on to find more.

Design Your Shirts

Before you begin selling t-shirts to the masses, you have to create designs that people want to buy. The first step is identifying your target market. Are you going to sell t-shirts to men, women, children, or a combination of the three? Are your t-shirts going to be more fashionable, or are they better suited for lounging around the house or hitting up the gym?

Once you’ve identified your target market, it’s time to think about the designs you’ll use. Let’s say that your t-shirts are aimed at the active man or woman. Your designs should incorporate fitness or motivational graphics. You can also determine other features of your shirts based on your target audience, such as the type of material used. If your shirts are designed for the fitness-minded consumer, for example, select a moisture-wicking fabric.

Your t-shirt designs don’t have to be overcomplicated as long as they appeal to your target audience. The key, though, is to make sure your designs are completely original. Not only does ripping off other designs make you look like a copycat, but you could face some serious legal issues if you use the artwork or designs of others without permission.

It’s also important to remember that sometimes a design may be a complete flop. Even the most well-known fashion designers in the world have released items that weren’t a hit with their devoted fans. If one design isn’t doing the job, try something else until you find what works best for your target audience.

Also, it doesn’t matter whether or not you have any design experience. As long as you have some ideas, you can hire a designer to bring your visions to life.

Decide How To Print Your Shirts

Once you have your designs, it’s time to think about how you’re going to bring the design from your computer or tablet screen to the front of a t-shirt. In other words, you need to decide how to print your shirts.

First, you’ll need to determine the method you’ll use to print your shirts. Screen printing is one option; it is a tried-and-true method that allows you to add long-lasting graphics to t-shirts. Screen printing is best for creating large batches of shirts since the initial setup is so time-consuming. Printing smaller batches is not cost-efficient with this method.

Another thing to note is that screen printing is best for very simple designs. Complex designs or multiple colors in one design can be problematic. If you have a more complicated design or pattern, consider direct-to-garment printing.

Direct-to-garment printing works similar to your color printer at home or at the office. The DTG printer prints directly on the t-shirt. With this method, you can use multiple colors and print complicated designs and patterns. Shirts printed with a DTG printer can be extremely detailed.

Setting up a DTG printer isn’t difficult or time-consuming. However, the actual printing process does take some time, so this method is best for smaller batches of t-shirts.

Another option to consider for printing your t-shirts is using a heat transfer machine. These machines transfer designs from heat transfer paper to the t-shirt. Full-color images can be printed using the heat transfer method, and you can easily print shirts on-demand. However, the quality is often lower and the design far less durable than using the other printing methods.

Regardless of which method you choose, there are two ways you can go about printing your shirts. You can use a third-party printing service or you can purchase the equipment and do it yourself. Let’s review the benefits and drawbacks of each.

Hiring A Third-Party Printer

Many t-shirt businesses do not do the printing themselves. Instead, these businesses hire a third-party service to handle the printing for them. There are a few benefits to hiring a third party to print your shirts. The first is that you won’t have to make an upfront investment in expensive printing equipment. You also won’t have to learn how to use the equipment or spend time running it.

However, there are some drawbacks to using a third party. You’ll have to shop around to find a printing company that provides high-quality workmanship. You don’t want your customers receiving t-shirts with graphics that fade or crack or that fall apart after the first wash. Many companies offer low-cost samples so you can check the quality before placing a larger order.

You also need to shop around and compare the pricing of different t-shirt printing companies. Some companies only fill bulk orders, which could put you at a disadvantage if you want smaller batches.

If you plan to only sell your designs online, you can work with an on-demand dropshipper. Once an order is placed on your website, the dropshipper will print and ship out the order to your customer. Before choosing a dropshipper, it’s necessary to place your own order to check out the quality of the shirts. You also need to evaluate pricing to make sure you’re getting the most bang for your buck. The major disadvantage to using a dropshipper is that if an order is wrong, slow to ship, or not printed correctly, the blame will fall on your shoulders, even if you don’t have control over any of these issues.

Purchasing Your Own Equipment

The alternative is to purchase equipment and print your own t-shirts. The advantage of this is that you have total control over both the quality and the number of shirts that are printed.

The major drawback, of course, is that t-shirt printing equipment is very expensive. Expect to spend at least a few hundred dollars for a heat transfer machine. If you want a DTG printer, expect to pay tens of thousands of dollars. You will have to pay for ink and maintenance of your machine. In some instances, you may be able to lease equipment to save on upfront costs.

You also have to take the time to learn how to properly use the equipment or train someone else to take on the job.

Decide How To Sell Your Shirts

Now that you’re closer to getting your shirts designed and printed, it’s time to decide how you plan to sell your items. You can set up an online shop, open your own brick-and-mortar store, or bring your designs to local stores in your area. You may also maximize profits by combining these selling tactics.

One of the easiest sales methods is to open an online shop. Customers can browse your designs and make their purchases directly online. You can ship out the orders yourself, or you can work with a dropshipper to make t-shirts on-demand when an order is placed. This option has low startup and overhead costs.

You can also open your own brick-and-mortar store. While you’ll be able to reach customers in your local area, this option has much higher startup and operating costs. Expenses may include rent for your commercial property, utilities, fees for business licenses and permits, and equipment. You’ll also have to purchase inventory to keep in stock. If you go this route, make sure to consider your local area. For example, if you live in a remote area, you may not have a large customer base. However, if you live in a thriving city or popular tourist destination, opening your own brick-and-mortar store may be a profitable venture.

The third option is to print out smaller batches of your t-shirts and network with local boutique and business owners in your area. With this method, you won’t have to pay for your own commercial space, but you will have to give the business owner a cut of your profits.

To determine what is right for your business, keep a few things in mind. Is this going to be your full-time job, or are you just trying to make a little extra money on the side? If you don’t plan on devoting yourself full time to your t-shirt business, stick to an online shop or sell your t-shirts through other businesses and boutiques.

Calculate Startup Costs

Once you have an idea of the direction you want your t-shirt business to take, you can start thinking about startup costs. The route you’ve chosen with your business will determine how much your startup costs will be.

If you plan to open a brick-and-mortar business, you’ll have expenses including a rent or lease payment, equipment and furnishings, utilities, a point-of-sale system, and inventory. Unless you plan to do all of the work yourself, you also have to hire employees. If your business will be based solely online, your costs will be much lower — think shipping costs, plus the price of a website, software, and ecommerce platform subscription fees.

Startup costs vary significantly based on the goals of your business. You can start big with a brick-and-mortar shop and may pay tens (or even hundreds) of thousands of dollars to launch your business. Start a smaller online shop, and you can get started for as little as a few hundred dollars to launch your website and register your business.

Register Your Business

You’ve started laying the groundwork for your t-shirt business, and now it’s time to make everything legal. The first step is to determine what type of business structure you will form. The business structure you select will determine how much you pay in taxes, as well as whether or not you will be personally liable for the debts and obligations of the business.

Sole Proprietorship

Sole proprietorships have one owner. These are the fastest and most inexpensive business entities to form and do not require registering with the state. The drawback is that sole proprietorships are not separate legal entities, so you will be personally responsible for the liabilities of the business. It may also be difficult to obtain a loan or raise capital as a sole proprietor.

Partnership

A partnership has two or more owners. A general partnership is the simplest form and does not require registration. General partners will be held liable for the debts, obligations, and liabilities of the business.

You may also consider starting a limited partnership, which has a general partner and limited partners. Limited partners are not responsible for the liabilities of the business.

Finally, you may choose a limited liability partnership, where all partners are limited partners and are not responsible for the liabilities of the business.

Corporation

A corporation is the most complex business structure. As a corporation, you will pay taxes at the corporate rate. Shareholders also pay taxes on dividends, resulting in double taxation. Corporations have ongoing requirements, such as electing a board of directors and holding annual meetings.

While a corporation is more expensive and complicated to form, this is the best structure if you see a large expansion in your future. As a corporation, you can sell stock to shareholders to raise large amounts of capital.

Limited Liability Company

A limited liability company, or LLC, combines benefits of different business entities. Like a corporation, business owners in an LLC are not personally liable for the debts and obligations of the business. However, LLCs do not have to pay corporate tax rates or face double taxation. LLCs also do not have ongoing requirements like corporations.

The type of business structure you select ultimately depends on the needs of your business and your future plans for growth. If you want to build a clothing brand that’s known around the world, choose a corporation or LLC structure. If you just want a smaller online shop that helps pay your bills, a sole proprietorship may be the way to go.

Once you’ve determined your business structure, you may be required to register with your state. Sole proprietorships and partnerships may file for a DBA (“doing business as”) under a fictitious name known as a trade name.

Depending on the type of t-shirt business you plan to operate, you may be required to obtain business licenses and/or permits from state and local agencies. Fees and requirements vary by state. You can contact local agencies including your City Clerk, Department of Consumer and Regulatory Affairs, and state Department of Revenue to learn more about the business licenses and permits required for your business.

Finally, you also need to register for an Employer Identification Number (EIN) from the Internal Revenue Service. This is required if you plan to hire employees now or in the future. Many business lenders may also require an EIN when you apply for funding. If you’re a sole proprietor, you may opt to use your Social Security Number in lieu of an EIN.

Seek Business Funding

“It takes money to make money,” as the old saying goes. As the owner of a t-shirt business, the amount of money you need to start and operate your business will vary according to your business model. If you have a small online shop, for example, your funding needs won’t be as great as if you’re operating a brick-and-mortar store.

Even if you have startup costs covered, there may come a time when you need additional capital for emergencies or operating expenses. If you can’t fund these costs out-of-pocket, it’s time to apply for small business funding. Whether you turn to someone you know or apply with an online lender, there are several financing options available for your business.

Friends & Family

Know a friend, family member, or colleague looking to invest in a new business? Pitch them your business idea. Prepare your presentation carefully to let them know why your idea is a winner. In general, you have two options for getting funded by someone you know. The first is to take out a loan. Your friend or family member provides you with a set sum of money that is repaid over a period of time — along with interest. This is known as debt financing.

The next option is a strategy known as equity financing. With equity financing, an investor provides you with the capital you need to cover startup costs or operational expenses. In exchange, the investor receives ownership in your business. While you may not be required to immediately pay back the investor’s capital, they will be able to take a portion of the profits over time. They may also have some level of control when it comes to important business decisions.

No matter which route you take, always make sure everything is in writing and signed by all parties. Then, uphold your end of the bargain. Nothing can make a good relationship go south faster than a business deal gone wrong.

Small Business Loans

With a small business loan, you can receive a lump sum of money that you repay over time. In addition to repaying your principal loan balance, you’ll also pay the lender interest and/or fees. You’ll make regular payments to the lender, which may be daily, weekly, monthly, or on another schedule.

Small business loans can be used for any business purpose, including funding an expansion, purchasing equipment for your business, or for use as working capital.

Recommended Option: LoanBuilder

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  • Time in business: 9 months
  • Business revenue: $42,000 per year
  • Personal credit score: 550
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You can fully customize your small business loan when you work with LoanBuilder. The LoanBuilder Configurator allows you to adjust your repayment terms and borrowing amount to create the right loan for your business.

Through LoanBuilder, you may be eligible to borrow up to $500,000. All loans come with one single fixed fee of 2.9% to 18.72% of the borrowing amount. Your fee is determined by the performance of your business and your credit history. Loans are repaid weekly over terms of 13 to 52 weeks.

To qualify for a LoanBuilder loan, you must meet the following requirements:

  • Time in business of at least 9 months
  • At least $42,000 in annual revenue
  • Personal credit score of 550 or above

Vendor Financing

As you build your t-shirt business, you’ll establish relationships with vendors and suppliers. In an ideal world, you’d always have money in your bank account to cover the costs of your inventory and supplies. However, this isn’t always the case. An emergency expense that depleted your account, a seasonal uptick in sales, or some other challenge may leave you struggling to pay your vendors upfront.

Many vendors do not offer their own credit programs, but there are lenders that offer vendor financing. With vendor financing, your vendors will be paid the full amount for their products or services while you’re able to pay off the expense over time. This prevents you from having to pay the full cost out-of-pocket for the inventory, supplies, and services you need to keep your business running smoothly.

Recommended Option: Behalf

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  • No specific time in business, revenue, or credit score requirements.
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Behalf provides vendor financing of up to $50,000 to qualified borrowers. You can repay your loan on a weekly or monthly schedule for up to 6 months.

Behalf charges a monthly fee for its service. Fees start at 1% and are based on the creditworthiness of the borrower. There are no additional fees to receive financing through Behalf.

There are no minimum credit scores, annual revenues, or time in business requirements, although a soft inquiry will be performed when you apply. You must have a U.S.-based business and a U.S. business bank account to qualify. Funds from Behalf can’t be used to fund existing debt, such as credit card bills or payroll.

Lines Of Credit

A line of credit is a flexible financing option that allows you to access capital on demand. Instead of receiving one lump sum, a lender sets a credit limit. You can initiate multiple draws up to and including this credit limit. Once a draw is initiated, the lender will transfer the funds to your business bank account. Then, you will repay the money over time, along with any fees and/or interest charged by the lender.

Since a line of credit is a revolving form of credit, funds will be replenished as you pay off your balance. This allows you to have continuous access to capital when it’s needed. A line of credit can be used for any business purpose, including funding emergency expenses, purchasing inventory, or using as working capital.

Recommended Option: Lendio

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  • Time in business: 6 months
  • Business revenue: $10,000 per month
  • Personal credit score: 550
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Lendio is a loan aggregator that gives you access to over 75 small business lenders with just one application. One of the financing options available through Lendio is a business line of credit.

Through Lendio, you may qualify for a line of credit from $1,000 to $500,000. Rates range from 8% to 24%. You could receive funds in as little as one week after you submit your application.

To qualify for a line of credit, you must meet these requirements:

  • Time in business of at least 6 months
  • At least $50,000 in annual revenue
  • Personal credit score of 560 or above

If a line of credit isn’t what you’re looking for, Lendio offers additional financing options, including:

  • Short-Term Loans
  • Equipment Financing
  • Business Credit Cards
  • Commercial Mortgages
  • Merchant Cash Advances
  • Startup Loans

Merchant Financing

If you need working capital and you use a service like PayPal to receive your payments, you may qualify for merchant financing.

Merchant financing is a short-term loan option for ecommerce businesses. Typically, qualifying is based on the performance of your business. The lender will provide you with a loan that is repaid over time with interest and/or fees.

Funds can be used for nearly any business purpose, from covering an emergency expense to buying more inventory or using as working capital.

Recommended Option: PayPal Working Capital

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  • Time in business: 3 months
  • Business revenue: Minimum $15,000 per year if you have a PayPal Business account, or $20,000 per year if you have a PayPal Premier account
  • Personal credit score: N/A
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If you accept payments through PayPal, you may qualify for the PayPal Working Capital program. Through this program, you can receive up to 35% of your annual PayPal sales as a loan. Your first loan can be up to $125,000.

PayPal Working Capital charges one set fee based on your sales history, the repayment percentage of your choice, and the loan amount. On days when no sales are made, no payments will be deducted. However, you must pay at least 5% to 10% of your total loan amount every 90 days.

To qualify for PayPal Working Capital, you must meet these requirements:

  • Have a PayPal Business or Premier account for at least 3 months
  • At least $20,000 in annual PayPal sales for Premier accounts or at least $15,000 in annual PayPal sales for Business accounts
  • No more than $20 million in annual PayPal sales

Business Credit Cards

Business credit cards work exactly like personal credit cards. The lender provides you with a set credit limit. You can use your card anywhere credit cards are accepted up to and including the credit limit.

The lender charges interest and fees on your balance until it is paid off. You do not have to pay off your balance in order to continue using the card provided you haven’t met your credit limit. A business credit card is a revolving form of credit, so as you pay down your balance, funds become available to use again.

Business credit cards give you on-demand access to capital whenever you need it. You can use business credit cards to pay for an emergency, purchase inventory, or buy equipment. You can also use your credit card to pay for recurring expenses, such as utility bills or software subscription fees.

Recommended Option: American Express SimplyCash Plus

SimplyCash Plus Business Credit Card from American Express


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Annual Fee:

$0

 

Purchase APR:

14.49% – 21.49%, Variable

Required credit: Good, excellent

Bonus offer: None

Purchase intro APR: 0% for the first 9 months

Balance transfer intro APR: N/A

Foreign transaction fee: 2.7%

Rewards:

  • 5% cash back at U.S. office supply stores and on wireless telephone purchases, up to $50,000 per year
  • 3% cash back on a category of your choosing (airfare, hotel rooms, car rentals, gas stations, restaurants, advertising purchases, shipping, or computer hardware, software, and cloud computing), up to $50,000 per year
  • 1% cash back on all other purchases

Notable perks & benefits:

  • Expanded buying power — buy above your credit limit with no penalty fees
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The American Express SimplyCash Plus card puts a new spin on credit cards. This is because this card allows you to spend over your credit limit without any fees. You can also receive cash back on all purchases – even if you’re over your limit.

The amount you can spend over your credit limit is based on your usage of the card, payment history, credit profile, and other factors. If you go over your limit, you simply need to pay the amount over the credit limit each month as part of your minimum payment. There are no fees for exceeding your credit limit.

With the SimplyCash Plus card, you can receive up to 5% cash back on your purchases. Wireless phone services and office supply store purchases yield 5% cash back on the first $50,000 spent each calendar year. You can also choose one category to receive 3% cash back on, such as advertising, shipping, hardware, or software purchases for the first $50,000 spent each calendar year. All other purchases receive 1% cash back.

There is no annual fee associated with this card. You’ll also receive a 0% introductory rate for the first 9 months. After that, variable APRs range from 14.49% to 24.19% and are based on creditworthiness.

To qualify for the American Express SimplyCash Plus card, you must have excellent credit.

Recommended Option: Spark Classic For Business

Spark Classic From Capital One

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Annual Fee:

$0

 

Purchase APR:

25.24%, Variable

Required credit: Fair

Bonus offer: None

Purchase intro APR: N/A

Balance transfer intro APR: N/A

Foreign transaction fee: None

Rewards:

  • Unlimited 1% cash back on all purchases

Notable perks & benefits:

  • Free employee cards
  • Fraud coverage and alerts
  • Capital One and Visa business benefits
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Don’t have perfect credit? Consider applying for Capital One’s Spark Classic for Business credit card. This rewards card gives you unlimited 1% cash back on all of your business purchases. There is no annual fee, and the card has a variable APR of 25.24%.

Additional benefits of Spark Classic for Business include free employee cards, fraud coverage, and extended warranty protection. This card also allows you to build your business credit so you can qualify for additional financing options in the future.

Applicants must have a fair credit score to qualify for the Spark Classic for Business card.

Choose Business Software

You’re one step closer to launching your business. Now, it’s time to choose the software you need to run your business effectively and efficiently. Some of the business software programs you may need for your t-shirt business include:

Bookkeeping Software

Bookkeeping software allows you to keep an eye on the financials of your business. With this software, you can easily track your business expenses, accounts receivable, and payroll. Many bookkeeping programs also allow you to track other aspects of your business, such as inventory.

With bookkeeping software, you’ll always know where your business stands financially. You’ll be able to run and print reports as needed, which may be required when you apply for business financing. Having all transactions reported in bookkeeping software can also help you prevent headaches when tax time rolls around.

No accounting experience? No problem! Check out The Beginner’s Guide to Accounting.

Payment Processing Software

If you plan to accept credit cards or other methods of payment, you will need payment processing software. Your payment processor will act as the communicator between your bank and the bank of your customers, allowing you to process credit cards, debit cards, and other forms of payment.

Point-Of-Sale System

If you want a more sophisticated way to manage your sales, you’ll need a point-of-sale (POS) system. A POS system not only includes credit card processing, but it also offers additional features including barcode scanning, inventory tracking, printing receipts, and reports and analytics.

Mobile POS systems allow you to use your app or smartphone to accept payments and keep your business running efficiently. There are also more advanced systems that include hardware such as monitors, keyboards, printers, cash drawers, and scanners.

Advertise Your Business

You’re almost to the finish line and ready to open your doors … or your online business. Before you launch, though, it’s time to think about advertising. After all, if no one knows about your t-shirt business, how are you going to make any sales? Don’t wait until after you launch to spread the word about your business — start right now with these advertising tactics.

Social Media

From middle schoolers to your own grandparents, it seems like everyone is on social media these days. Use this to your advantage to let potential customers know about your t-shirt business.

The great thing about social media is that setting up your profiles is absolutely free. You can also get started in just minutes. Set up pages for your business on Facebook, Twitter, Instagram, and/or Pinterest. Include critical information about your business on each profile including your contact information, website and/or online shop link, and photos of your t-shirts. Later, you can use your profile to share news about your business and new products, advertise sales, or host giveaways.

You can also look into advertising on social media. You can purchase ads for any budget and customize your target audience to get your name out to potential customers.

Another option to consider is talking to social media influencers. Social media influencers recommend products to thousands of followers, helping companies drum up new business. If an influencer wears your shirt and links to your website, you could see an influx of customers.

Some businesses will send a free sample of their products to social media influencers. While this does mean some out-of-pocket costs for you, the exposure you could receive could be well worth the small expense.

Want to learn how to take your social media marketing to the next level? Learn more in our Guide to Social Media Marketing.

Build Your Website

In addition to your social media profiles, you also need a website to build your web presence. Website builders make it easier than ever for you to create your own professional website. You can also easily build an online shop with today’s modern ecommerce platforms.

When you build your website, make sure that it is designed to appeal to your target audience. Don’t forget to include information on your website such as contact info, details on your products, and clear photos of what your business offers. As you build up your website, you can include additional information and features such as online chat options, FAQs, news and updates, and reviews and testimonials.

Word Of Mouth

Never underestimate the power of word-of-mouth advertising. The trick to this one is simple: provide high-quality products and exceptional customer service. If someone buys one of your t-shirts and is pleased with the quality, they’ll be proud to wear it and tell others about your business. If the shirt was poorly made or customer service was lacking, they’ll also tell others.

Word of mouth advertising is an easy and free way to get the word out about your new business. And don’t be afraid to toot your own horn. If someone gave a great review, share it on social media and your website. Don’t be afraid to ask customers to give their feedback, but don’t be pushy. Also, learn to accept criticism. Not all of your reviews and feedback will be glowing. Instead of taking offense, learn from it. Where is your business lacking? How can you make sure that each customer that purchases your t-shirts is fully satisfied? Never stop trying to improve your business, and always provide the best products and customer service to keep your customers coming back for more.

Final Thoughts

Owning and operating your own t-shirt business can be fun, exciting, and lucrative, but don’t be fooled … a lot of hard work is necessary to make your business a success. Don’t rush the process. Instead, take the time to plan out your business, create unique designs, and provide high-quality products and service that will draw customers to your business.

Want to learn more about starting your own business? Download our small business guides for the information and tips you need to launch your business venture.

The post How To Start And Fund A T-Shirt Business appeared first on Merchant Maverick.

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Business Insurance For Startups: How Much It Costs And Why You Need It

Business Insurance For Startups: How Much It Costs And Why You Need It

If you are a startup business, you obviously have a lot to juggle. That said, business insurance should be a top priority as you move forward. Go ahead and Google “lawsuit and startup” (or maybe don’t if you’re panic-prone) and the news will run the gamut.

Even if you aren’t a doomsday type of buyer, there are many other reasons to be insured. Maybe you need to show insurance to your investors and clients before they’ll join you on your venture, or maybe you need to secure commercial property insurance to set up shop in a physical space.

Bottom line: You need insurance.

Even if your startup is a sole proprietorship or a limited liability company, the financial impact of a mistake or a lawsuit could cripple your startup or create a situation where your personal assets could be at risk. Why toss the dice?

Read further to see why you need insurance, what kind of insurance you might need, and the most cost-effective ways to secure insurance for your startup.

Why Startups Need Insurance

Business Insurance For Startups: How Much It Costs And Why You Need It

Startups need insurance for the same reasons that any business needs insurance: there are risks involved with starting and running a business, and a mistake or accident could permanently cripple your finances and your chances for success. Since startups, by nature, are new and innovative and often work with up-and-coming technologies, you may not even be able to imagine all the ways you could put yourself at risk. You need business insurance precisely because you’re wandering around in unfamiliar territory. Time spent worrying about potential pitfalls is time you could be using to build your business: insurance buys you fewer things to worry about.

Also, in some instances, business insurance might be legally required. (If you have even one employee, depending on where your business is located, you’ll need worker’s compensation as a minimum.) Lawsuits and angry customers — and perhaps even upset investors — may be part of your startup’s journey, and the best way to gain some confidence and assurance is to protect yourself.

You might need business insurance if you:

  • Have a physical storefront/location for your business
  • Rent business equipment or property
  • Use a car or a fleet of cars
  • Advertise or have an online social media presence
  • Employ people
  • Work with customers
  • Provide professional advice
  • Want to protect personal assets
  • Have investors in your company

In the discovery stage of your startup, you may not need as much insurance as you will later on when you are gaining momentum and adding employees and partners; however, it’s never to early to understand what you need and why.

8 Types of Business Insurance Startups Might Need

Business Insurance For Startups: How Much It Costs And Why You Need It

For a startup business, the types of business insurance to choose from can be long and tedious to understand. Each type of insurance protects a different aspect of your business and could be required based on business demographics like where you are located, how many employees you have, and what type of risk is involved in your startup.

While individual needs will vary, here are the basic types of business insurance startups should consider.

General Liability Insurance

General liability insurance covers your expenses should you go to court to defend an accident, an injury, or damage to property. Typically, your policy will pay for legal representation, litigation fees, out-of-court settlements, and judgments set by the court. Sometimes called “Slip and Fall Insurance,” general liability will also cover medical bills if a client is injured due to an accident at work. This is the foundational insurance policy that every business should have. Accidents happen and this basic coverage makes sure you won’t lose your business when they do. 

Commercial Property Insurance Or Business Owners Policy

If you own a commercial property, have a storefront, or have a physical location for your office, then you will need a commercial property insurance policy. This policy covers theft and damage done to your property through vandalism or wind, rain, snow. General liability insurance covers people and commercial property insurance covers things. There is also a Business Owner’s Policy (BOP) that joins commercial property and liability together in a bundle for extra savings.

Commercial Auto

Sometimes a startup will make the mistake of assuming that their personal auto insurance is enough to protect a car driven for work. However, it’s a known fact that even reputable insurance companies look for ways to avoid paying a claim. If you use your car for business or have employees out driving around for your business (especially if you have a commercial fleet of vehicles), you will need commercial auto insurance. Don’t assume your personal insurance is enough to cover a vehicle involved in an accident during business hours.

Professional Liability

This type of insurance policy is sometimes called malpractice insurance or errors and omissions insurance (E&O). If someone in your company makes a professional mistake (an error of judgment) or omits key information that impacts someone financially (an omission), people can sue you.

Startup businesses are in a state of flux as they establish themselves and might be more likely to inadvertently make a professional mistake. If your company is in the business of giving advice, professional liability protects you in the event that someone feels your advice was harmful, either to them personally or to their company. Thinking of professional liability insurance as malpractice insurance is the best way to understand the various ways people might try to find your company liable.

Cyber Liability

Twenty years ago, cyber insurance protection wasn’t even on the radar of business owners. But if your business has any type of online presence or if you use a database to store customer information, this provides an added layer of protection in the event that your website or database is hacked and personal information is leaked. When a hack occurs, there are many legal requirements related to communicating with customers and securing their identities in the aftermath. A cyber liability policy covers the financial fallout of a data breach.

Worker’s Compensation Insurance

If you have employees, you’ll need worker’s compensation insurance to cover you and your business in the event that an employee is injured on the job. General liability insurance will cover an injured customer or client, but an injured employee falls under a different umbrella of insurance — one that is a legal requirement. (As with most insurance policies, however, the legal requirements are state specific.) Workers compensation pays for medical and legal fees if your employees are injured at work.

Employment Practices Liability Insurance

Employment practices liability insurance protects you against a discrimination or wrongful termination lawsuit. Even if you can’t imagine one of your employees or startup partners making a claim of discrimination, it could happen, and the costs to defend yourself could become crippling.

The Equal Employment Opportunity Commission (EEOC) defines eleven different types of possible workplace discrimination: age, disability, equal pay, genetic background, nationality, pregnancy, race, religion, retaliation, sex, and sexual harassment. Employment Practices Liability Insurance helps protect your business in the case of a discrimination lawsuit.

Key Person Insurance

Key person insurance is a life insurance policy on the key person/owner of a business. If you die and your startup can’t function without you, what happens? (Insurance is fun to talk about at parties: Hey, let’s talk about all the accidents that could happen or the different ways people might sue you. Also, what if you die?) But also: what if you die? If someone’s brain and personhood is a big part of a startup’s success, then the startup may be able to insure that person’s life with the company as the beneficiary. If a key person in your startup passes, that insurance money can be used to pay off investors or keep the company from bankruptcy.

How Much Does Startup Insurance Cost?

Business Insurance For Startups: How Much It Costs And Why You Need It

Insurance costs will vary depending on the financial makeup of your company. Insureon analyzed its 18,000 policies of business insurance for companies with 10 employees or fewer and came up with the following numbers: the average cost for business insurance is $1281 annually with the median at $584.

What will affect your insurance costs the most? Well, not everything is in your control: you may need workers compensation as a legal requirement and general liability to work with contractors, but what else could lower or raise the average cost?

  • Your Business Size: What is the physical square footage of your business? What kind of space does it require? A larger space will require a larger policy.
  • Your Business Location: Where you are located will affect your premiums because some states are more accommodating than others toward small businesses and startups. Are you located in a state that is considered small business friendly or lawsuit friendly? Location also factors into other business risks like flooding, crime, and foot traffic.
  • Business Sales Reports: How much money do you make? The more money you make, the more insurance you’ll need. An actuary (someone who assesses your company’s risks) will look at your numbers and see how much you — or they — might stand to lose.
  • Your Business Industry: Some industries are built with more risk than others, and the insurance company will examine all the ins and outs of how your business operates to know the best ways to protect you.
  • Number Of Employees: More employees, more insurance costs.
  • Claim History: As with any insurer, the actuary will also look at your past business history and see if you have made any claims in the past.
  • Types Of Policies: The bigger your business, the bigger the policy. If you don’t have any employees and can stick with general liability, you will pay pennies next to a business that is working to protect employee incomes.

With so many factors specific to your own business, it’s important to check with an insurance professional to itemize your needs and the costs associated with each policy.

Ways To Save On Startup Insurance

As with all things in business, finding a cost-effective way to provide services is always at the forefront of a startup owner’s thoughts. Let’s be honest; money is on your mind. As a startup, you might be juggling how to finance your company and are noticing that sometimes loans require insurance. (Your lender wants to know you will be able to fund this asset; insurance gives confidence to lenders if you financing through loans or through grant money.) Maybe your investors require insurance or maybe you already understand its necessity for your peace of mind, and you want to get the cheapest insurance possible.

However, it’s important to understand that a cheaper policy may not be cheaper in the long run. If you start with a higher deductible and a lower limit, your monthly premiums may seem manageable, but one claim could put those entire savings at risk. At that point, you are banking on the best-case-scenario and still not effectively planning for the worst-case-scenario: a business risk.

Without going light on the coverage you need, here are a few ways you can try to save a few dollars:

  • Bundle Policies: Bundling your insurance policies will often save you money. Consider a business owner’s policy which combines both general liability and commercial property insurance.
  • Shop Around: The lowest quote may not always be the best deal in the long run if the company wouldn’t support you when you submit a claim. Research the carriers and their ratings. Five independent agencies (including Standard, Poor, and AM Best) rate the financial strength of an insurance company and you can use their services for free if you sign up for an account.
  • Choose A Higher Deductible: A deductible is the amount of money you will pay before your insurance kicks in. Choose a higher deductible and your premiums will go down. (Understand that one lawsuit or claim could eat up that whole deductible and may not be cost-effective in the long run; so be prepared to pay that deductible and crunch the numbers.)
  • Find Group Rates: Group rates might be available for your industry and if you can purchase insurance as part of a group, your premiums will go down.
  • Work With An Agent Who Specializes In Business: Not all insurance agents, brokers, or companies are created equally. And certainly, not all of them will understand the specifics of your industry. Go out and find someone who knows your business and can help you understand the
  • Pay Your Premium In Full: It may be cheaper to pay your premiums for the year in one lump sum rather than spread them out in 12 monthly installments.

Getting Started

Okay. Your startup needs insurance, that’s a given. You now have a general understanding of what policies you might need and how to save a few dollars insuring your business. What next?

There are many ways to get started. Check with your current insurance company to see if they offer commercial business plans. If so, see if it is cost effective to bundle your personal and business insurance policies. If not, go shopping. Many sites like Coverwallet, Coverhound, and Insureon will comparison shop for you and walk you through the steps required to make an insurance purchase.

Your startup needs protection. Don’t make the mistake of leaving yourself vulnerable for an attack when your company isn’t ready to handle the pressure or the financial fallout.

The post Business Insurance For Startups: How Much It Costs And Why You Need It appeared first on Merchant Maverick.

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