If you’ve looked into setting up a nonprofit organization, you’ve probably noticed a few terms floating around. The industry is usually described as “nonprofit,” but at other times the term “not for profit” is used instead. So which is it, nonprofit or not for profit? Is there an appreciable difference between these two terms, and if so, which best describes your organization?
In this article, we’ll compare the terms “nonprofit” and “not for profit.” Then, we’ll go into more detail on the advantages and disadvantages of officially registering as a nonprofit organization. Finally, I’ll point you to a few resources that can help you during the process of registering as a nonprofit.
However, before we go on, it’s important to note that we have written this article for organizations based in the United States. If you aren’t based in the US, you should look into your home country’s laws, terms, and policies regarding nonprofits.
Keep reading to learn about the difference between nonprofit and not for profit, and to find out how those terms apply to your organization!
Nonprofit VS Not For Profit
In the past few years, there has been some discussion online about the exact definitions of “nonprofit” and “not for profit.” Some writers argue that these two terms represent two entirely different types of organizations, while others say that the terms are completely interchangeable. As I researched for this article, I spent some time exploring the different sides of the argument, as well as diving into IRS resources for more detailed information. Here’s what I’ve found:
The terms “not for profit” and “nonprofit” both refer to organizations that are designed to serve the public and not intended to make a profit. These organizations are typically eligible for tax-exempt status, provided they keep up with the IRS’s requirements.
“Not for profit” is a newer term that has gained popularity because it more clearly describes what a nonprofit does. Most “not for profit” or “nonprofit” organizations do in fact make a profit at some point in their existence. However, they do not exist for the sake of making a profit. Any profits made are put to use furthering the cause of the organization, not making anyone richer. Many people feel that the term “not for profit” better expresses the intention of these types of organizations without mistakenly implying that the organization will never make a profit.
In addition, the term “not for profit” is often used as a descriptor for all organizations that serve nonprofitable purposes. These organizations include charities, sports clubs, business leagues, and more. Some of these organizations serve the public while others provide services for their own members. “Not for profit” is a good umbrella term that many people use to talk about all of these organizations.
Key Takeaway: Not for profit is NOT an official business structure, and the IRS does not use this term to describe any business. As you look into registering your organization with the IRS, you will only find them using the term nonprofit.
The word “nonprofit,” is an older and more familiar term for organizations that work for the good of society without the intent to earn a profit. While there are many types of organizations that are “nonprofit,” people tend to use this term to refer to charitable organizations such as The American Red Cross, The Human Society of the United States, and Feeding America. Nonprofit is the more common term, and it is the one that the IRS favors.
To sum things up, despite the slight differences in the ways these words are used colloquially, nonprofit and not for profit are technically interchangeable terms. They both refer to organizations that don’t profit from earnings and which are typically eligible for tax-exempt status and other IRS benefits. So, despite some nuance, there is no real difference between “nonprofit” and “not for profit”.
Types Of Nonprofit Structures
Even though “not for profit” and “nonprofit” mean essentially the same thing, there are still some distinctions that you can make between different types of nonprofits. As I mentioned above, there are many types of nonprofits, and this list goes beyond the charitable organizations that typically come to mind. Fraternities, recreation clubs, and employee associations can also apply for tax-exempt status as nonprofit organizations.
So, what category does your organization fall under? Let’s take a look.
The most common types of nonprofits are those that fall under section 501(c)(3) of the IRS’s “Publication 557: Tax-Exempt Status for Your Organization.” 501(c)(3) organizations are the types of organizations that immediately come to mind when you hear the word “nonprofit.” They are charitable organizations, churches, medical research groups, and so on. These organizations are eligible to be exempt from federal income tax (and state income tax depending on state law). Here’s a quote from the IRS that describes 501(c)(3) organizations:
An organization may qualify for exemption from federal income tax if it is organized and operated exclusively for one or more of the following purposes:
Testing for public safety.
Fostering national or international amateur sports competitions (but only if none of its activities involve providing athletic facilities or equipment; however, see Amateur Athletic Organizations, later in this chapter).
The prevention of cruelty to children or animals.
To qualify, the organization must be organized as a corporation (including a limited liability company), unincorporated association, or trust. Sole proprietorships, partnerships, individuals, or loosely associated groups of individuals won’t qualify. (Publication 557: Tax Exempt Status for Your Organization)
Organizations that fall under section 501(c)(3) are also eligible for many benefits beyond just tax exemption. For more information, jump down to the Pros & Cons of Registering as a Nonprofit section of this article.
Other 501(c) Nonprofits
While section 501(c)(3) encompasses many nonprofit organizations, it is by no means the only classification of nonprofits. The IRS’s list of tax-exempt organizations includes many organizations that do not fall into any of the categories above. These include social and recreational clubs, business leagues, voluntary employee’s beneficiary associations, and more. Although these organizations do not fall under section 501(c)(3), they do fall under other 501(c) sections. The IRS lists a total of twenty-nine 501(c) sections, including the following:
501(c)(4): Civic Leagues and Social Welfare Organizations
501(c)(5): Labor, Agricultural, and Horticultural Organizations
501(c)(6): Business Leagues, etc.
501(c)(7): Social and Recreation Clubs
501(c)(8) and 501(c)(10): Fraternal Beneficiary Societies and Domestic Fraternal Societies
501(c)(13): Cemetery Companies
These 501(c) organizations tend to differ from 501(c)(3) organizations because the funds raised often go towards furthering the existence of the club or league, rather than accomplishing a charitable purpose. This means that members of these organizations benefit in a non-financial way from participating in the nonprofit.
Pros & Cons Of Registering As A Nonprofit
When you set up a nonprofit organization, you will be faced with a choice. Do you go through all the hassle of applying for tax-exempt status with the IRS, or do you forego that step and continue as usual? As you make this decision, you should keep in mind the pros and cons of each option. So, here are the pros and cons of registering as a nonprofit with the IRS.
1. Tax Exemptions
This is a pretty obvious advantage to registering for tax-exempt status with the IRS. If your organization qualifies, you are exempt from federal income tax. In addition, you can pass along tax benefits to your donors. If you are a registered nonprofit, donors can count their donations as tax-deductible.
Your organization may also qualify to be exempt from state income tax, sales taxes, and employment taxes, depending on your state.
2. Eligibility For Many Discounts
On top of the tax benefits, nonprofits–and more specifically 501(c)(3) organizations–are eligible for discounts from many services. Registered nonprofit organizations get access to reduced postal rates, and you can use your 501(c)(3) status to get discounts on many business software options. For example, many project management software apps (for example Basecamp, Asana, and Trello) offer discounts for 501(c)(3) nonprofits.
3. Lower Credit Card Processing Rates
One of the biggest discounts from which 501(c)(3) organizations can benefit is reduced credit card processing rates. These reduced fees allow nonprofits to keep more of their donor’s contributions. Take a look at our article on the best credit card processors for nonprofits for more information.
1. Applying For Tax-Exempt Status Can Be Difficult
Setting yourself up as a tax-exempt nonprofit can be a long and difficult process. You’ll need to read through the IRS’s documentation to understand the requirements your specific type of organization has to meet, and then you have to gather all of the necessary documentation. The IRS estimates that the application form alone should take you 100 hours to complete, and the whole application process typically lasts between three and six months. Fortunately, we have a few resources to help you down this path. Take a look at our Step-by-Step Guide to Registering your 501(c)(3) Nonprofit Organization as well as the IRS’s interactive course on Applying for Section 501(c)(3) Status for some guidance.
2. You Have To Work To Stay Exempt
Gaining tax exemption status is not a one-time event. In fact, The IRS refers to tax exemption as a “lifecycle.” In order to stay tax-exempt, you have to meet certain responsibilities. These responsibilities include maintaining good records, filing an annual return, and allowing the public to inspect certain IRS filings. And, of course, you have to always remain a nonprofit, meaning that the money that you earn should go only to furthering the purpose of your organization.
How To Register Your Organization As A Nonprofit
Have you decided to register your organization as a nonprofit? If so, you’re in for a long haul, but it should pay off in the end!
Registering your organization is an eight-step process, beginning with selecting a name.
Choose and reserve a name for your nonprofit.
Form a board of directors
File articles of incorporation
Write your organization’s bylaw
Hold your first board meeting (taking minutes, of course)
Apply for an Employer Identification Number (EIN).
File your 501(c)(3) application.
Obtain business licenses and permits
Is your head spinning yet? Registering as a nonprofit is not a small task. Fortunately, we have some resources to get you started. If you’d like to see the eight steps to registering a nonprofit laid out in much more detail, check out our Step-by-Step Guide to Registering your 501(c)(3) Nonprofit Organization. This guide names the specific forms you have to file to register as a 501(c)(3) nonprofit, and it provides much more information about each step along the way.
Or, have you decided that your organization doesn’t quite fit within the category of a nonprofit? Take a look at our complete guide to the different types of business structures to find something that better fits your organization.
Whatever route you decide to take, we wish you the best of luck! And as always, feel free to share your questions and advice in the comments below.
The post Whatâs The Difference Between Nonprofit & Not For Profit Organizations? appeared first on Merchant Maverick.
You’ve done it. You’ve come up with a business idea, you’ve drafted your business plan, and you’ve started estimating costs and seeking funding to get your small business off the ground.
Or maybe you’re further along in the process. You’ve launched your business, and you’re working hard to ensure it’s a success. Good for you!
But wait … are you sure you’ve thought about all the key components of running a profitable business? For example, have you thought about how you’re going to do the accounting for your new business? If your doors are already open, do you have an accounting system in place?
If your answer is no, this article is for you. While it’s important to create a business plan, shop around for vendors and suppliers, and deliver exceptional products or services to customers, few things are more important than accounting for your business. Without good accounting, you’re putting your business at risk of failure by not keeping a close watch on your financials.
As a new business owner, you already have a lot of expenses that can pile up quickly. Adding an accountant to the mix just isn’t feasible for most businesses in their beginning stages. Fortunately, there are options available that make accounting simple … and are easy on the wallet. In this post, we’re going to talk about small business accounting. We’ll start off with the basics, then take a step-by-step look at how to use accounting in your business. We’ll explore accounting software options, the financial statements your business needs, and the tax deductions that can save you money come tax time.
Whether you’re a new business owner or haven’t gotten off the ground yet, whether you know a little about accounting or you’re completely in the dark, you’re in the right place. Welcome to Accounting 101.
What Is Accounting?
Merriam-Webster defines accounting as:
The system of recording and summarizing business and financial transactions and analyzing, verifying, and reporting the results.
In other words, accounting is a process used by business owners and entrepreneurs to keep track of the financial transactions of a business, from purchasing supplies and inventory to the revenue that the business makes. Accounting allows you to analyze the financial health of your business to determine where money is being spent, how money is being made, and how these numbers affect the business.
The Basics Of Accounting
Whether you’ve dabbled in accounting in the past or you’re brand new to it, every business owner should have an understanding of the basics of accounting. These concepts may be very new to you or seem confusing at first. However, take the time to learn them so that you can tackle your company’s finances head-on and reap the benefits of good accounting.
The Accounting Equation
We can’t discuss the fundamentals of accounting without first discussing the accounting equation. Knowing and understanding this principle is essential for double-entry accounting, which we’ll discuss a little later. For now, though, let’s familiarize ourselves with this basic equation.
The accounting equation states that:
Now, let’s break down each of these terms to ensure that you have a full understanding of the accounting equation.
Assets: Assets are everything that your business owns. This includes the cash in your business bank accounts, commercial real estate, equipment, inventory, and accounts receivable.
Liabilities: Liabilities include everything that your business owes. This includes accounts payable, loans, and other debts.
Owner’s Equity: Owner’s Equity (also known as shareholder’s capital) includes all investments of capital by the owners of the business.
The accounting equation keeps everything in balance. Each side must be balanced. If each side isn’t balanced, there is an error that must be found and corrected.
The Importance Of Double-Entry Accounting
Many businesses use what is known as double-entry accounting. Double-entry accounting simply means that transactions are recorded to two or more accounts. This system of accounting provides more accuracy and helps keep your books balanced. The accounting equation we discussed earlier is the foundation of double-entry accounting.
Double-entry accounting gives you a better view of your business finances. Single-entry accounting only uses income and expenses, whereas liabilities and assets are recorded using double-entry accounting. Not only does double-entry accounting give you a better understanding of the net worth of your business, but it offers additional benefits. Double-entry accounting makes it easier to spot errors and also comes in handy when it’s time to run financial reports.
This is a very basic overview of double-entry accounting. To learn more about how it works and why your business should use double-entry accounting, check out our post, What Is Double-Entry Accounting (And Do You Need It)?
Debits & Credits
In double-entry accounting, transactions are recorded as debits or credits.
You’re probably already familiar with debits and credits if you use a debit card from your bank or a credit card. That said, you’ll need to forget everything you think you know when learning accounting, because these concepts are completely different.
If this sounds like a foreign language to you, don’t worry. Let’s break it down so it’s easier to understand.
Debits: A debit increases assets and expenses and decreases liabilities.
Credits: A credit decreases assets and expenses and increases liabilities.
Total debits must equal total credits or there is an error that needs to be found and corrected.Â Remember, it’s all about balance.
Let’s take a look at an example. Say your business has purchased a piece of equipment at a cost of $15,000. You borrowed the money to purchase the equipment. Because you gained an asset, this is recorded as a debit of $15,000. However, you have to pay back the money you borrowed, which creates a liability. Therefore, you will record a credit of $15,000 under accounts payable (liabilities).
Totals Debits = $15,000 Total Credits = $15,000 â
Both sides are equal and balanced.
Debits and credits are not used in single-entry accounting. While it may seem easier to simply skip this and forego double-entry accounting, remember the benefits that we discussed earlier. Using double-entry accounting gives your business a clearer, more complete view of your finances. And before you get too worried, most accounting software handles the double-entry accounting for you behind the scenes, so you won’t have to do everything manually.
Ultimately, understanding these concepts may be difficult, but you’ll find that the benefits of balanced books are well worth the effort.
An important piece of the accounting pie is the general journal. This is where all business transactions are recorded in order by date. Each journal entry should include four things. Those are:
The date of the transaction
The account(s) and amount(s) credited
The account(s) and amount(s) debited
A memo describing the transaction
When recording a journal entry, debits are recorded in the left column, while credits are recorded in the right column. Each side will be balanced, meaning that the total amount of debits on the left should equal the total credits on the right. Let’s look at a quick example.
You purchase $500 worth of inventory for your business. This inventory was purchased with cash. You have inventory (an asset) in your possession, so $500 is recorded in the left column of the journal since this is a debit. Because you paid with cash, your cash account is decreased by $500. Therefore, a credit in the amount of $500 is posted in the right column.
The Chart Of Accounts
Another key accounting concept to remember is the chart of accounts. A chart of accounts lets you see exactly where your company’s money is going. While it may seem confusing initially, understanding how a chart of accounts is organized helps the numbers make sense.
While we won’t dive too deeply into this concept, you should walk away from this article with a basic understanding of what a chart of accounts is. Typically, a chart of accounts is divided into five sections: assets, liabilities, equity, income, and expenses. These categories are further divided into accounts, such as utilities, advertising, accounts payable, cash, and materials and supplies.
Here’s an example of what a chart of accounts looks like:
Your chart of accounts is important for a number of reasons. In addition to breaking down your expenses, your chart of accounts helps you have a clear picture of where your money is going to and coming from. Your chart of accounts also helps you track inventory and can be extremely beneficial come tax time. If you remember our journal entry example from earlier we spent $500 cash on inventory, you’ll see this reflected in the chart of accounts above where the “cash on hands” account reads -$500.
To learn more about this accounting concept, check out our post, How To Set Up A Chart Of Accounts.
Now, let’s pause, take a breath, and let all of this information sink in. Understanding these concepts and key accounting terms certainly helps you dive into your company’s accounting with more confidence. Rest assured, however, that you don’t have to know everything about accounting to balance your own books. Gone are the old days of paper journals and ledgers and manually writing down every transaction. Today, there are lots of accounting software options available. While you do have to learn how to use your chosen software and may still have to do some tasks manually, accounting software does a lot of the heavy lifting for you, from automatically posting transactions from your business bank accounts to calculating depreciation on assets to sending out recurring invoices.
How To Do Small Business Accounting
With an understanding of basic accounting concepts under your belt, it’s time to put that knowledge into practice. From the first steps you need to take before launching your business to picking the right software for your business to hiring an accountant, we’ll cover it all in this section.
Set Up Your Business Entity
Before you start your business, you must set up your business entity. This determines your legal structure and influences how you file and pay taxes, your personal liability for the debts and liabilities of the business, how you can raise money for your business, and various requirements that your business must meet. Consider the needs of your business and future goals when selecting your legal structure. The main business entities include:
Sole Proprietorships:Â A sole proprietorship is an unincorporated business that is owned and operated by one person. This is the easiest entity to set up and does not require formal registration. Business profits or losses are reported on the owner’s personal income tax return. A sole proprietor is held liable for the debts and obligations of the business.
Partnerships:Â Partnerships are legal structures for businesses with two or more owners. Formal registration is not required to form a partnership, although there should be an agreement between partners. Business profits and losses are passed through to the owners and filed on their personal income tax returns. The owners in a partnership may be responsible for the debts and obligations of the business based upon the type of partnership that has been formed.
Corporations:Â Corporations are the most expensive and complicated of all legal entities. Corporations have regulations that other legal structures don’t have, such as establishing bylaws and holding meetings. Corporations may also be subject to corporate tax rates and may face double taxation. However, there is limited liability on the owners, and corporations also have more opportunities for raising large amounts of capital through the sale of stock.
Limited Liability Company:Â A limited liability company (or LLC) combines the benefits of multiple entities. Owners of LLCs have limited liability, so personal assets aren’t at risk if the business goes under. The owners of the LLC can also determine how business revenue is taxed.
Check out our post, Types of Business Structures: The Complete Guide, to learn more about the different business entities, and consider speaking to an attorney to determine which choice is best for your business.
In addition to setting up your business entity, there are a few other steps you need to take in these early stages. The first is selecting a name for your business. As a sole proprietor, you aren’t required to register your business if you’re using your own name. However, some small business owners opt to file a Doing Business As, or DBA. A DBA is a fictitious name that is registered with the county or state where the business will operate. If you select another legal structure, such as an LLC or corporation, you’ll register your business name when you file other paperwork with state and local authorities.
The next step is obtaining any licenses and permits required to legally operate your business. Your local chamber of commerce or Small Business Administration office can help you find out what your business needs and how to obtain these licenses and permits.
If you plan to hire employees for your business, you will need to obtain an Employer Identification Number (EIN). This is available at no cost by registering with the Internal Revenue Service.
Other steps that you may need to take before opening your business may include purchasing business insurance, hiring employees, buying or leasing commercial space, and advertising your business to bring in customers.
Open A Business Bank Account
When you start your own business, you need a business bank account. This should always be one of the first steps you take before launching your business. However, if you’ve already gotten your business off the ground and don’t have a separate account, it isn’t too late to head to your local branch to open a business account.
There are a few reasons why opening a separate bank account is so important for your business. First of all, it simplifies bookkeeping and filing taxes. You won’t have to pick apart every transaction to determine which ones were personal and which were for business purposes.
Speaking of taxes, keeping a separate business bank account could prove to be extremely helpful in the event that you’re audited by the IRS. Sloppy bookkeeping and jumbled expenses could very easily turn a simple audit into a drawn-out nightmare.
Finally, if you plan to apply for any type of business funding, such as loans or lines of credit, a lender typically only deposits funds into a business bank account. By opening a business bank account, you also establish a relationship with a bank, which could provide you with low-interest funding further down the road.
Choose Your Accounting Method
Now, if accounting didn’t seem confusing enough, we’re about to throw another curveball your way. There are actually two different methods of accounting. Before you get frustrated, though, just know that the two types are very easy to understand and differentiate from each other.
The first (and most common) method is accrual accounting. Accrual accounting recognizes revenue and expenses or sales or bills are incurred, not when the cash switches hands. With this type of accounting, accounts payable and accounts receivable are recorded.
Accounts Payable: Expenses that you owe but haven’t yet paid (think bills).
Accounts Receivable: Revenue that your customers owe but haven’t yet paid (think invoices).
Let’s take a look at an easy example. Let’s say that you’ve received $5,000 in payments from your customers and $1,000 in outstanding invoices. You also have paid bills totaling $500 and $100 in unpaid bills.
Using the accrual method, your total profit for this time period would be $5,400. You would add the revenue you have received ($5,000) plus your accounts receivable ($1,000). Then, you would subtract your expenses ($500) and your accounts payable ($100) because your accounts receivable (unpaid invoices) and accounts payable (unpaid bills) are already recognized as part of your profit/loss.
The benefit of using the accrual accounting method is that it gives you a clear view of your income and expenses.Â On the flip side, though, it doesn’t give you a clear picture of the cash flow of your business. While your books may show that you have earned a bigger profit, you might not have as much available cash because of unpaid invoices.
The other method that you may use for your business is cash basis accounting (or simply cash accounting). Cash basis accounting recognizes revenue and expenses when cash changes hands. This method does not use accounts receivable or accounts payable. Instead, only revenue that has been received and expenses that have been paid are calculated.
Let’s go back to the previous example. Remember, we have $5,000 in revenue, $1,000 that we haven’t yet received, $500 in expenses, and $100 that we owe. Using the cash method, your total profit would be $4,500. You would simply subtract your expenses that have been paid ($500) from the revenue that your business has received ($5,000) because cash basis accounting does not include your accounts receivable (unpaid invoices) or accounts payable (unpaid bills).
The benefit of using the cash basis accounting method is that you can more easily track your cash flow at any time. However, you won’t get the longer-term overview of your revenue and expenses through the accrual method and most accountants do not recommend this form of accounting.
There are some other differences between the two methods of accounting, such as how income is reported for tax purposes, but this is just a basic overview. If you want to learn more to help you decide which method is right for your business, check out our post, Cash VS Accrual Method: Which Is Better For Your Business?
Find The Right Accounting Software
Our modern, tech-filled world makes it easier than ever to operate a business. This includes accounting software that eliminates the tedious tack of paper accounting. While this software doesn’t do all the work for you, it does keep your financial information organized in one spot, automates some tasks, and simplifies the accounting process. In other words, you don’t have to have a degree in accounting to do your own books if you have the right accounting software. If you don’t have the funds to hire a bookkeeper or accountant for your business (and most new businesses don’t), accounting software is a cost-effective way to keep your finances on track.
So, how do you know which software is best for your business? There are a few considerations to keep in mind:
Price:Â Before searching for accounting software, have a budget in mind. What can your business comfortably afford? In some cases, you may not be able to afford anything — and that’s okay! There is free accounting software available. However, free software may come with lots of ads, fewer features, or allow for no more than one user. If you have complex accounting needs, multiple users, or have other specific needs, there are options available at all price points.
Features:Â Consider the needs of your business when choosing accounting software. If you’re running a larger business, for example, or need software specific to your industry, free software with basic features won’t be a good fit. You may want the whole gambit: invoicing, contact management, accounts, payable, time tracking, project management, and more. However, if you run a smaller business, have only a few clients, and don’t need a ton of added features, a basic and easy-to-use program is a good choice.
Online & Offline Options:Â Most business owners and entrepreneurs these days use online accounting solutions. There are many benefits, including no installations required, automatic updates, integration with apps, and access from multiple devices, such as your smartphone. However, there are also desktop-based options that may work for you, such as in locations that don’t have fast and reliable internet connections.
Your Accounting Skills: Before choosing accounting software, keep in mind your accounting skills. If you’re new to the game, look for software designed with the beginner in mind that offers an easy-to-use interface and has great customer service. If you have some experience in accounting, you can certainly dive right into one of the more complex programs.
Add-Ons:Â Some accounting software offers additional add-ons for an extra fee. Payment processing, for example, may be an additional feature that benefits your business. Again, consider the needs of your company and shop around your options for software that best fits these needs.
Not sure where to start? Compare some of the top options available to your business.
Stay On Top Of Bookkeeping
Accounting software certainly simplifies accounting and bookkeeping tasks, but it’s important to remember that it doesn’t do all the work for you. You will still have to keep on top of certain bookkeeping tasks. The specifics of your bookkeeping requirements vary based on the needs of your business, but some common bookkeeping tasks you may have to perform include:
Creating and sending invoices to customers
Reconciling bank statements
Reviewing expenses and income
Reviewing aged receivables
Sending payment reminders or setting up automated reminders
Analyzing and updating inventory
Reviewing and paying invoices to your suppliers and vendors
Running and reviewing financial statements
Run Financial Statements
Running and reviewing financial statements is made easier with accounting software. Financial statements not only help you stay on top of your business finances but also help when filing your taxes and may be required if you apply for a loan or other funding.
Let’s discuss some of the most common financial statements you need to run for your business.
Balance Sheet:Â A balance sheet reports assets, liabilities, and equity for a set period of time. This report provides an overview of owner investments, what the company owes, and what the company owns. The balance sheet uses the accounting equation we discussed earlier and is used in conjunction with other reports to analyze the financial health of the business. The balance sheet can also be used to calculate ratios, such as the debt-to-equity ratio.
Profit & Loss Statement:Â A profit and loss statement (also known as P&L or income statement) shows the profit or loss of a business over a specific period of time, such as quarterly or annually. The cost of doing business — including cost of goods sold and operating expenses — are deducted from the revenue (or top line) of the business. The difference between the two is known as the net income, or the bottom line, and shows whether the business had a profit or a loss.
General Ledger:Â The general ledger contains every financial transaction that occurs within a company. Transactions are broken down into accounts, which include assets, liabilities, equity, income, and expenses. The chart of accounts that we discussed earlier is typically the first page of the general ledger.
Statement Of Cash Flows:Â A statement of cash flows (or simply cash flow statement) shows how money comes into and goes out of the business. Cash inflows from operations, financing, and investments are recorded on this statement. Cash outflows are also recorded. This includes investments and expenditures for business activities. A statement of cash flow gives you a view of the financial health of your business, helps you analyze how your money is made and spent, and helps you plan for the future to ensure you have cash available to keep your business in operations.
These are just a few of the financial statements that you can run using accounting software. While these are the major reports that every business should run, the software you select may also offer additional reports that are important for your business like job costing reports, annual budgets, reports of sales by product, and other financial documents.
Don’t Forget Tax Deductions
It’s time to discuss the moment that most small business owners dread: filing and paying taxes. With good accounting, though, filing your taxes (or getting through an IRS audit) won’t be quite so painful.
The rates and requirements for filing taxes are based on the legal structure of your business. For example, a sole proprietor simply files the business income or loss on their personal tax return, while certain corporations may face double taxation wherein tax is paid on the income of the business and on the dividends received by the owners.
While filing your taxes can be scary, especially if your business made a profit, you can ease your tax burden by taking advantage of the tax deductions available to small business owners. This can include:
Furniture & expenses
Marketing & advertising expenses
Salaries & wages
These aren’t all of the tax deductions available to small business owners. Working with an accountant or tax professional can ensure you take advantage of all the deductions available to your business.
Know When To Hire An Accountant
While it is possible to handle much of your own accounting for your small business, there comes a time when many businesses need to enlist the help of an accountant. There are a number of reasons that business owners choose to hire an accountant. As the business grows, you may become too busy to handle the financial side of things and would prefer to focus on other activities within the business. An accountant is also extremely beneficial to have on board when it’s time to file your taxes. If you plan to acquire or sell a business, an accountant can provide advice and help determine if the transaction is a smart financial move. When you want to expand your business, an accountant can give advice and help you create a business plan.
There are several situations where hiring an accountant is in the best interest of your business. Even though this is an additional expense, it is often a critical move if you want to grow a successful and profitable small business. Learn more about when you should hire an accountant for your business.
The Benefits Of Good Accounting
We’ve established that every small business should have an accounting system in place. But why is it important to have good accounting? At the risk of sounding melodramatic, the success of your business depends on it — quite literally. Here are the benefits of good accounting:
Budgeting & Planning:Â Good accounting can help you set company budgets for your business and plan for upcoming projects.
Financial Health:Â As previously mentioned, having your numbers organized allows you to assess the financial health of your business to determine what you’re doing right … and what needs to be changed.
Track Payments: Without good accounting and bookkeeping, it’s difficult to keep up with customers that haven’t yet paid you for your products or services. By staying on top of your accounting and bookkeeping, you can easily send out invoices, payment reminders, and even collect payments.
Tax Time Benefits:Â Keeping accurate records makes it easier to file your taxes or go through an audit by the IRS.
Funding Opportunities:Â If you seek capital from investors or lenders, having accurate financial statements is critical to securing funding — and some lenders (like Fundbox) even require that you use accounting software to be approved.
Major Purchases:Â If you’re considering a major purchase to grow your business, the numbers can help you determine if it’s the right time to make the purchase, or if it makes more sense financially to hold off on spending the funds.
Cash Flow:Â Good accounting lets you assess the cash flow of your business to determine where you need to make changes to boost profitability.
Revenue Forecasts:Â With the right financial reports, you can more accurately forecast future revenues of your business.
Maximize Business Growth:Â Accounting allows you to track the growth of your business, allowing you to make important decisions and changes to help maximize growth.
The Bottom Line
Every business is different, but one thing should remain constant: good accounting. Whether you’re a sole proprietor running a business from your home office or you visualize running a large international corporation, all business owners and entrepreneurs should make accounting a priority. With so many great software programs and tools at your disposal, it’s easier and more affordable than ever to track your company’s finances. Take a look at the Best Accounting Software For Small Businesses to start your journey on finding the perfect accounting software.
Ready to learn more about accounting? Check out our eBook, The Beginners Guide To Accounting. It’s free to download and is a must-read for any business owner or entrepreneur that’s ready to master the basics of accounting.
The post Accounting 101: Understanding Small Business Accounting appeared first on Merchant Maverick.
There are lots of tasks you have to perform to keep your business operating. Ordering supplies and inventory, marketing to your customers, and — perhaps most importantly — getting paid. Getting paid for your services or products is critical to keeping your business on track. And to get paid, you have to invoice your clients — a task that’s made simple using invoicing software.
Invoicing software allows you to create and send invoices directly to your customers. But today’s software options take things a little further, providing you with a variety of tools that simplify getting paid and running your business. These options include creating estimates and proposals, tracking time and expenses, and integrating with payment gateways, so you’re no longer waiting on a paper check in the mail.
If you’ve explored invoicing software in the past, the many options out there can be overwhelming. That’s why we’ve created this guide. We’ve narrowed down the choices to seven of the best options on the market today. We’ll dissect each option, giving you the most important information, such as pricing and features. We’ll also look at the factors you should consider when making your choice. Invoicing software simplifies invoicing your clients, and this guide is designed to simplify choosing the best software for your business. Let’s get started!
What To Look For In Good Invoicing Software
The good news is that there are lots of invoicing software options on the market. The bad news? Choosing which one is best for your business can be a challenge. While forever-free options and free trials make it easy to shop around, know what to look for before you sign up by considering these factors.
Price: Nothing in life is free…or is it? Fortunately, there are plenty of invoicing software options available at no cost. What’s the catch? It depends on the software. Some software is ad-supported, while others place limitations on the number of clients you invoice or lacks features found in paid options. While free software may work in the beginning stages of your business, you may need a more robust program as your business grows. In this case, an upgrade may be an order. Be aware, however, that if your subscription costs more than $30 per month, there are more affordable options out there. Or you can use those funds to invest in full accounting software instead.
Strong Features:Â Any software you select should have a strong feature set. Specific features that you need vary based on your preferences and the needs of your business. At a minimum, though, every business should look for software that offers powerful security features, good mobile apps, a user-friendly interface, and a well-organized client portal.
Automations:Â Some invoices will need to be sent manually. Others can be sent automatically with software that offers invoice automation, allowing you to set up recurring invoices, send out reminders, and schedule other tasks. The more automations, the more smoothly your business runs, so you can get back to doing what you love most.
Integrations: The software you choose should integrate with third-party apps and software. For example, if you already use bookkeeping or accounting software, look for an invoicing solution that syncs with this software. It’s also important that your chosen software integrates with multiple payment gateways, allowing your customers to pay their invoices online easily.
Good Customer Support:Â There may come a time when you have a question about your software, need troubleshooting advice, or simply want to upgrade your subscription. All of this is made much easier with strong customer support and good customer service. Look for software that offers multiple ways to get in touch, has fast response times, and provides resources to help you get the most out of your software.
Best overall invoicing software for small businesses. Ideal for businesses needing strong features, great invoicing automations, and international invoicing.
Zoho Invoice, introduced in 2008, has grown to become one of the most popular invoice software options on the market today. This cloud-based software offers some great features ideal for small- to medium-sized businesses and offers multiple pricing options, including a free version for business owners on a budget.
In addition to boasting such features as customizable templates and support for multiple languages, Zoho Invoice goes beyond merely invoicing. Through this program, you can create estimates, track time and expenses, manage contacts, and create and manage projects. Zoho Invoice also has a very user-friendly interface and excellent customer support. It should come as no surprise that Zoho Invoice has gotten overall favorable reviews from its users.
There are, however, a few drawbacks, although these are minimal. If you need an extensive inventory tracking system, look elsewhere, as Zoho Invoice only has a basic item list available. This software also falls a little short in terms of integrations, although that number is on the rise. At this time, Zoho Invoice has ten payment gateways and 14 integrations. For most businesses, though, this shouldn’t pose a problem, and the many positive aspects of this software overshadow the few negatives.
What makes Zoho Invoice’s offerings stand out from other invoicing software solutions? There are quite a few benefits to selecting this software, including:
Unlimited invoices and estimates
16 customizable invoice templates
Easy to use
Invoicing in 14 languages
Excellent customer support
Well-designed client portal with real-time notifications
Expense and time tracking
Exceptional customer support and resources
Multiple mobile apps
Zoho Invoice offers four pricing plans. The Free Plan allows one user to invoice up to five customers at absolutely no cost. For $9 per month, the Basic Plan gives one user the ability to invoice up to 50 customers. Upgrading to the Standard Plan at $19 per month gives access to three users and allows you to invoice up to 500 customers. The Professional Plan costs $29 per month, can be used by up to ten users, and has no limitations on the number of customers that are invoiced.
Best for small businesses that want to save money with free software.
Small business owners — especially new ones — often look for ways to cut expenses. One way is to take advantage of free software, such as the invoicing software offered by Invoice Ninja. Since 2014, over 90,000 small business owners have signed up with Invoice Ninja for its great features at no cost — and no, there isn’t a catch.
This forever-free software boasts features you would find with paid software, including invoices and estimates, time and expense tracking, item lists, contact management, and project management. An especially unique feature is Invoice Ninja’s voice commands, which allows you to send invoices and perform other tasks using your voice. If you need assistance, Invoice Ninja offers multiple ways to get in touch and exceptional customer support. The software has overall received excellent reviews from past and present users.
The free version of Invoice Ninja is best for small businesses and freelancers that serve 100 or fewer customers. If you have more than 100 customers, you will have to upgrade to one of the paid (but still affordable) software options. If you also have more than one user, you will need to upgrade your subscription, as the free version only allows access to a single user.
Invoice Ninja is one of the top options for forever-free invoicing software. If you need additional features, you can upgrade to one of the paid subscriptions. However, many small businesses will find everything they need with the no-cost plan. All plans include the following benefits:
Unlimited invoices and estimates
Over 40 payment gateways
Excellent customer support
Cloud-based and self-hosted options
Strong mobile apps
Available in 30 languages
Up to 10 invoice templates
Recurring invoices and payment reminders
The Forever Free Plan is truly free and gives you access to all of the previous benefits. This plan allows one user to send invoices to up to 100 customers. If you have more than 100 customers, you can sign up for the Ninja Pro Plan. At $8 per month, you’ll be able to send invoices to unlimited customers. You’ll also have access to additional features, including 13 reports, proposals, and invoices that don’t feature Invoice Ninja branding. This plan is limited to one user only. Pay for ten months, and you’ll receive two months free. You can also take this plan on a test drive with a free 14-day trial.
If you have multiple users, you can sign up for the Enterprise Plan, which starts at $12 per month. Like Ninja Pro, you can pay for ten months and receive two months free. You’ll also receive a 30-day guarantee. This plan supports up to 20 users and offers additional benefits, such as support for third-party attachments and branded client portal links.
Best for small businesses seeking an all-in-one invoicing and bookkeeping solution.
Freelancers and small business owners that want an invoicing software with bookkeeping options should look no further than FreshBooks. FreshBooks launched in 2003, but the company kept its software fresh with a revamp in 2017. The new version of FreshBooks offers lots of great accounting features, including double-entry accounting, journal entries, and bank reconciliation.Â If that’s more than you need, don’t worry — the old version is still available. FreshBooks Classic is true invoicing software with a few bookkeeping features. This software is a great choice for businesses that need basic bookkeeping and accounting functions but is not suitable for businesses that have more complex accounting needs.
With FreshBooks, you can send unlimited invoices and estimates to your customers. You’ll also be able to complete other tasks critical to your business, including time management, expense management, and project management tools. Depending on the plan you select, you may also be able to use features, such as bank reconciliation, reports, journal entries, and proposals. Both versions of the software are very easy to use, customer service is excellent, and FreshBooks has received mostly positive reviews from its users.
It’s obvious why over 10 million customers have chosen FreshBooks as an invoicing solution, but what’s the catch? Businesses with multiple users won’t find what they need here, as each plan only supports one user. If you have multiple businesses, another software will be a better fit, as FreshBooks doesn’t offer support for more than one business. While there are numerous integrations, FreshBooks only has two payment gateways.
FreshBooks stands out from its competitors because of its accounting features that you won’t find with other invoicing software. Other benefits of this all-in-one software include:
Unlimited invoices and estimates
Support for 14 languages
Excellent customer support
Strong mobile apps
Two customizable templates
Up to 11 reports
Over 80 integrations
Recurring invoices and payment reminders
Unlike many of the other software we’ve recommended, FreshBooks does not offer a free plan. However, there are three pricing tiers available to fit your needs best. The Lite Plan is best for freelancers or microbusinesses with five or fewer customers who don’t need double-entry accounting. This plan’s price is $15 per month. The Plus Plan costs $25 per month and allows you to bill up to 50 customers. As a Plus customer, you’ll get even more features, including unlimited proposals, automated payment reminders, and double-entry accounting reports. The Premium Plan will set you back $50 per month but allows you to bill up to 500 customers. Additional team members can be added as users for $10 per person, and payment processing is also available for an additional fee.
If you need a more customized solution, you can inquire about the Select Plan. This plan is for businesses that need to bill more than 500 customers. This plan — which is custom priced based on the needs of your business — also gives you access to a personal account manager, custom training, and other features.
Best for businesses that want a simple, no-fuss solution for managing bills and invoices.
Software that does it all and comes packed with features is great for some businesses. But what if you’d prefer a hassle-free way to simplify bills and invoices? If this sounds familiar, Bill.com may be the right solution for your business. Since 2006, Bill.com has streamlined the process of paying your bills and invoicing your customers. With this software, you can take control of your accounts payable using tools, such as reviewing and approving bills from any device, sending domestic and international payments to vendors and suppliers, and storing invoices, checks, and receipts.
But that’s not all that Bill.com offers. You can also manage your accounts receivables through this software. With Bill.com, getting paid is faster and easier with features, including automated invoices, automated reminders, contact management, and direct payments with ACH, credit card, or PayPal. Bill.com syncs with your accounting software, simplifying the process of reconciling your bank accounts and keeping your books balanced. There are also some features you won’t find with most other invoicing software, such as a customizable chart of accounts.
This software is best for medium- to large-sized businesses that want a more streamlined way to send invoices and pay bills. Small businesses may also benefit if they have a large number of payments and/or invoices. While this software can be a bit pricey, it’s a fraction of the cost of hiring an employee to handle these tasks. However, keep in mind that if you only want invoicing software and have your accounts payable under control, there are more affordable invoicing software options out there.
If billing and invoicing are slowing down your business, take advantage of all that Bill.com has to offer, including:
Unlimited document storage
Unlimited users (for an additional cost)
Strong security features
Up to 30 reports
Recurring invoices and payment reminders
There are four pricing plans available through Bill.com. The Essentials plan is the cheapest at $39 per user per month. With this plan, you can choose to manage payables orÂ receivables but not both. The Team plan costs $49 per user per month. This option also only includes payablesÂ orÂ receivables. The difference is that this plan allows you to sync the software with Xero, QuickBooks Pro, QuickBooks Premier, and QuickBooks Online. The third plan allows you to manage both receivablesÂ andÂ payables at the cost of $69 per user per month. This plan includes additional features, such as invoice and payment automation. Finally, you can get a custom quote for the Enterprise plan. It comes with all the features included in the other plans with the addition of advanced features, such as more integrations and API access.
Best for product-based small businesses that want an easy way to send invoices on the go.
Square has become known for its payment processing services, but in 2014, the company added Square Invoices to the Square Dashboard. When you sign up for a Square account, you automatically have access to Square Invoices as well as other tools for your small business. One of the best things about Square Invoices is that it’s completely free to send invoices to your customers.
Square Invoices is very easy to use and has a well-organized interface. There is just one template for invoices, but it can be customized by changing the colors and adding your logo. Square Invoices is the perfect software for busy entrepreneurs, making it easy to send invoices right from your smartphone or another connected device. In addition to mobile invoicing, Square Invoices has other tools to help you operate and grow your business, such as estimates, contact management, employee management, advanced inventory features, and sales tracking. You can even create contracts and easily attach them to your invoices.
Square Invoices is best for small- and medium-sized product-based businesses. Because of a lack of project management features and advanced invoicing capabilities, it’s not a good fit for service-based or project-based businesses.
Square is more than just a payment processor. Its invoicing feature and other tools are also beneficial to many businesses. Why should you choose Square? Consider the following benefits:
Unlimited invoices and estimates
Excellent mobile apps
An easy three-step process to send custom invoices
Recurring invoices and payment reminders
14 reports plus custom reports
Good customer support
Over 100 integrations
To use Square Invoices, you must sign up for a Square account. The good news is that your Square account is free. Sending invoices to your customers is also free. However, if you want to take advantage of some of Square’s other features — such as payment processing, payroll, or advanced employee management — there are additional fees.
Best for small businesses that want to manage time, projects, and invoices in one place.
Harvest launched in 2006 with a focus on time tracking. Since it’s launch, the software has evolved to provide additional tools for small businesses. Though its invoicing features are limited when compared to its competitors, Harvest’s time tracking features, basic invoicing, and project management tools are ideal for service-based and project-based businesses.
You won’t find advanced invoicing features with Harvest, but there’s enough to get the job done. In addition to being able to create and send invoices, you can also create and send estimates, track time, set up recurring invoices, create reminders, and manage your employees. Harvest also offers basic expense tracking as well as project management options that allow you to assign projects, set budgets, and track time and expenses.
There are a few drawbacks to be aware of before you sign up. Harvest isn’t a good fit for product-based businesses or any business that needs advanced invoicing features. If you need more advanced accounting features or don’t have much use for the project management tools offered through Harvest, consider shopping around for another software option.
Why is Harvest on this list? In addition to being a great choice for project-based and service-based businesses, here are more reasons why you should consider using this software:
Unlimited estimates (paid plan only)
Over 90 integrations
Good customer support
Strong security features
Harvest offers two plans. The first is the Free Plan, which doesn’t cost a dime. This plan allows one user to manage up to two projects and gives access to all of the other great features. If you need to add more users or projects, you can sign up for Harvest Pro, which costs $12 per user per month. With this plan, you can manage unlimited projects as well as take advantage of Harvest’s other features. Harvest offers several discounts for Pro members, including 10% off when you pay annually and 15% off for nonprofits. You can also give Pro a try with a 30-day free trial.
Best for creating and sending invoices through mobile devices.
Most business owners aren’t just sitting behind a desktop computer anymore. Today’s busy entrepreneurs are relying more and more on mobile devices to keep in contact with vendors and clients, collaborate with team members, and even send invoices. If you’re one of the people that prefers using your smartphone to conduct business, Invoice2go can help simplify sending invoices and getting paid by your customers.
Invoice2go features strong Android and iPhone apps that make it easier than ever to create customized professional invoices on the go. Setting up and using the software is simple, allowing you to send your first invoice in just minutes. Invoice2go offers additional features as well, such as expense tracking, invoice templates, estimates, time tracking, and purchase order management. You can send invoices in a variety of ways, including SMS and mobile apps. Cloud-based desktop software is also available if you prefer to go that route.
On the downside, though, Invoice2go — as the name implies — focuses primarily on invoicing. If you need more advanced bookkeeping and accounting features, another option will better suit your needs. If you don’t primarily use your mobile device for business purposes, Invoice2go likely won’t be a good fit for your business. Another downside is the limitations placed on the less-expensive subscription plans, which we’ll discuss in detail in just a moment.
Considering Invoice2go as your invoicing software? There are many reasons why you should choose this option, including:
Strong mobile apps
Good customer service
Easy to use
Good customer service
There are several plans to choose from if you select Invoice2go as your invoicing solution. The Standard Plan allows you to send up to 200 invoices and 200 estimates per month. One user can use the software, and up to 25 clients can be added. The Standard Plan costs $9.99 per month. For $19.99 per month, you can sign up for the Advanced Plan, which allows you to send up to 400 invoices and 400 estimates per month. Two users are included in this plan, and you can add up to 100 clients. This plan also gives you access to appointments. The Unlimited Plan, at the cost of $33.99 per month, lives up to its name by allowing you to send unlimited invoices and estimates and store an unlimited number of clients. This plan gives access to five users and includes recurring invoices and payment receipts. All plans are billed annually. A 14-day free trial is available, and Invoice2go offers a 30-day money-back guarantee.
Choosing The Best Invoicing Software For Your Business
Choosing the right invoicing software can be a hassle, but there are a few things to keep in mind to help narrow down your choices. Start with the options in this post and compare pricing, features, and other factors to find software that works for your business. Don’t be afraid to shop around and even test out a few options before making your final decision. When testing out software, look for options that offer free plans or free trials, so you can fully explore the software before making an investment. If the software you test lags, is difficult to use, or it doesn’t offer the features you need, move on to another option until you find your perfect match. Your ideal match should have the features you need and make sending your invoices a breeze.
The post These Top 7 Invoicing Tools Are Your Answer To Sending Small Business Invoices appeared first on Merchant Maverick.
So you’ve got some marketing skills, and you’re wondering how to start a digital marketing agency.
But there’s just one problem…
How do you start a digital marketing agency with no experience?
There have never been more opportunities to strike off on your own in the digital marketing space than there today. But how do you actually do it? Where do you start, and how do you scale?
The secret to starting a digital marketing agency with no experience is to have an actual strategy, grow organically as you learn, and deliberately build word of mouth with a specific type of client. It’s about taking aim vs. shooting randomly and hoping something lands.
There’s also a major misconception that starting a digital marketing agency has to mean a HUGE process that requires building a massive company and doing “all the things” and taking all the clients.
In reality, a digital marketing agency can be just…you. It’s not about the pricey software or offices or employees. It’s about determining who you help, how you help them, and then actually doing the work.
The business model of an agency is fairly straightforward. Sure, you can tinker around the edges about whether to bill by hour, by week, by task, or by project. But at its core, you are providing specialized knowledge for a fee. An agency of one and an agency of 10,000 work in basically the same way.
With that concept in mind, here’s how to start a digital marketing agency with no experience.
1. Set Your Business Goals
Before you decide to do anything, you’ve got to do some planning. What do you want the business to actually look like? What’s the end goal? The vision?
Starting your digital marketing agency without some sort of direction in mind is like trying to get to a new restaurant with no address and no navigation. You end up lost, taking wrong turns, and probably not having much success.
If you’ve observed the industry for any length of time, you’ll notice that agencies with conflicting goals run into trouble often. But the ones that stick to their vision do well.
Some agencies want to maximize prestige. They focus on recognizable clients who are willing to do interesting work. Some agencies want to maximize profits. They focus on boring but high growth, high opportunity clients. Some agencies want to maximize freedom / autonomy. They focus on low maintenance, consistent clients. And some agencies want to maximize business value. They focus on internal operations, cash flow, and strong branding.
There is no correct goal – except to choose a specific goal and stick to it no matter what.
There’s no one-size-fits-all approach to starting a digital marketing agency. There are big agencies, small agencies, agencies that focus on just one part of digital marketing (like search engine optimization) and full-service agencies who do everything from design and development to paid media, local marketing, and SEO.
It’s up to you to decide who you want to serve and how you want to serve them.
What To Consider
Do you want to serve local clients, or go outside of your local sphere?
Are you focusing on a specific industry?
Do you want to offer a specific digital marketing service, or a variety of services?
Do your clients need to be within a certain budget?
Are there services you don’t want to offer? Niches you don’t want to serve?
What To Avoid
Avoid trying to have something for everyone. You know what they say about a jack of all trades… you’re a master of none.
Avoid direction hoping. Pick a direction and see it through until you have enough data and experience to make a decision on changing directions.
2. Define Your Target Audience
The irony of all ironies is that usually, marketers are horrible at marketing themselves, mainly because they don’t go through their own steps.
If you’ve done any marketing before, then you know one of the first things you do as you develop your marketing strategy is get clear on your target audience. The same applies for starting your digital marketing agency.
Once you’ve decided on who you want to serve, it’s time to dive a bit deeper. What are they struggling with? How do you help them with that problem?
Outline the wants, needs, likes, dislikes, habits, and information of someone you think would definitely be an ideal client for your agency. Outline what their marketing needs are, what their goals are, and how you can help achieve those goals through the service(s) you’ve decided to offer.
Don’t just armchair imagine this. Ask potential customers what they struggle with when it comes to getting the word out about their business. What do they wish they could get some help with? What do they look for in a digital marketing agency?
Make 2 to 4 very specific personas. Remember that your initial market is not your total market. Even if you start out by targeting a very specific geographic area or a very specific customer doesn’t mean that you can’t expand. It’ll just give you more focus.
What To Consider
Get specific. It’s better to start small and scale (i.e. being a digital marketing agency that helps local dentists get more clients through organic search) than try to help everyone and get lost in the noise (i.e. being a general marketer who can do anything for any business).
Remember that your initial market is not your total market. It just gives you focus.
What To Avoid
Avoid businesses that don’t align with your overall business strategy. Sure, it’s great to get work in the beginning, but remember… pick a direction and stick to it. If you don’t offer a service, don’t offer it – even if it means turning down a little bit of money at the beginning.
Personas aren’t just for marketing strategies. Have 2-4 for your own business direction so you know who to say yes to and who to say no to.
3. Build an Online Presence
Once you have an idea of what type of agency you are, who you serve, and how you serve them, it’s time to think about how you’re going to present this information.
This means building your online presence through your website and social channels.
Setting Up Your Website
You don’t need to have a full-blown website to have a digital marketing agency. But given you’re helping people get seen online, you should have some sort of online presence.
If you are going super-lean, you can use a Facebook page, Yelp profile, or a few focus (aka “landing”) pages (more on that in a minute). But going without a decent looking website will put you behind the curve and place limitations on what you can do with your brand & marketing.
I recommend setting your own website up with a common, well known software like WordPress and hosting it on your own hosting account**. I have a simple guide to doing that from scratch here.
That route will give you a good technical foundation with fast, simple setup and access to other business tools like email and digital storage. It will also allow you to implement a customized off the shelf design – “themes.” Themes allow you to have a website that looks good enough to make a sale without spending months and lots of money on a 100% custom design. Creating a website on something like WordPress also allows you to implement a 100% custom design when that time comes.
**Note – self-hosting WordPress does have a learning curve. For a long-term website with a business that has resources, it’s worthwhile. But – there is absolutely a role for a hosted website builder for many businesses – especially if your business will focus on clients who use a specific platform (like Wix or Squarespace or Shopify). I have a guide to selecting a good website builder here.
Setting Up Focused (aka “Landing”) Pages
As I mentioned above, a few high-quality focused pages on your website can get you a long way. In addition to your Home page, About page, and Privacy page, you need landing pages to address specific needs.
When I say “landing pages” – don’t think of anything too complex or anything that you would need to A/B test. I’m simply referring to pages that visitors can land on from a search engine or an ad and find exactly what they are looking for. I like to call them Focused Pages rather than Landing pages.
Why? Here’s pro tip that few website owners will admit to: nobody cares about or even sees your homepage.
Your homepage is for people who already know you who are. For businesses in a single specific service, you can use it to “rank” for your main industry term.
Landing pages go beyond your homepage.
Landing pages are for new (or returning) visitors to land on and convert. Before you build out all your website pages, you should develop focused landing pages that sell to one or all of these buckets:
Service specific – These pages should promote your services. But, they shouldn’t be generic. You should make them either focused on the problem that your service solves (ie, no website traffic) or focused on the application of your service. For example, it’s one thing to offer “SEO” – it’s another to make websites more crawlable, more relevant, and more visible in search.
Geography / Demography specific – These pages are all about the location service & logistics of obtaining your agency’s services. Even though your work might be global, your clients’ are likely not global. They will pay for someone who understands their local market. Additionally, if you have a keen understanding of a demographic (ie, college students), then you can focus on that as well.
Industry Specific – These pages should promote your expertise within specific industries. Even though marketing principles do not differ much across industries, clients want someone who can understand their perspective. If you know more than someone else about [X] industry, you should promote that. And if you can go deeper within a niche, then do that.
Now – the magic here is combining buckets & going deeper within each bucket. Until you are big & growing, going niche is your friend. Create combinations to make extremely focused pages.
“Digital Marketing for the Travel Industry” will not bring in your first clients.
“Facebook Marketing for AirBNB Hosts in Atlanta, Georgia” absolutely will.
The goal here is to sell to people at the very bottom of the marketing funnel – the customers most likely to convert and most likely to succeed. These pages will both rank organically – and you can use them for paid ads.
What To Consider
Detailed content content (like a blog) can take your presence a long way. Think about future functionality you may want to have on your site so you can choose a platform that supports it and don’t have to create something from scratch once you’re ready to implement it.
Practice what you preach. If you’re a copywriting agency, make sure your copy is up to par. If you’re a design agency, make sure your site looks like you can actually design something.
You don’t have to be everywhere (i.e. Pinterest, Instagram, Twitter, WordPress, Facebook, YouTube). Pick your starting channels and expand later if need be.
What To Avoid
Avoid perfection. The goal is to have a online presence that shows you’re legit, but being an agency is about billable hours. Don’t spend more time working on your own presence than your clients’.
4. Get Visible (AKA Getting Leads and Clients)
Once you have a place to send people, it’s time to get some leads and clients.
Again, marketers are notoriously bad at marketing themselves. But the days of “build it and they will come” are long gone. You actually have to do something to get clients and start building your portfolio, especially if you’re starting a digital marketing agency with no experience.
Here are a few key steps to follow to get the word out about your digital marketing agency.
Word of Mouth / Referrals
Above all other marketing techniques, agencies thrive on word of mouth and referrals. In fact, many top agencies are past the point of direct response marketing. They grow exclusively on word of mouth. They know how to appeal to certain markets and what kind of performance it takes to get further referrals.
The focus of your landing pages will help word of mouth since you’ll develop a simple, straightforward reputation.
In order to get referrals, you’ve got to get clients to back up your reputation. Which brings me to…
Also known as hustlin’. This consists of all the tedious and tough pitching that you know you need to do… but don’t want to do.
Now, it doesn’t mean spamming. It means going directly to your market and doing appropriate outreach.
It means emailing and Facebook messaging people that you know might be interested in your marketing services (or know others who might be). And sending them to your landing pages to learn more about your agency or hopping on a call with them to talk about how you can help them. And again, the focus of your landing pages will help make word of mouth simpler. You’ll stand out when people remember you as “the [X] marketer for [Y] industry in [Z] city.
It means helping within industry forums. I got my first handful of web design clients after helping people on the WordPress.org support forums. I got my first ecommerce client after helping in the Shopify forums. I never pitched anyone directly, but this type of manual, hand-on work counts as direct outreach.
When you’re just starting out with no experience, direct outreach is one of the most effective ways to get clients quickly (which you can then turn into referrals).
Tap into your existing network, look for projects that you can knock out of the park, and continue to get your name out there without having to spend money on ads or wait for your inbound strategy to grow (more on that in a minute).
Check out this case study or this post for even more detail on how to use direct outreach.
Yes, it’s true — Google Ads and Facebook can be expensive for a good return on investment, especially for the close to converting keywords that you should try to buy.
But if your serious about building a long-term marketing strategy for your digital marketing agency, then your goal is a bit different when using paid traffic.
You are buying data. Lots of data.
You should be doing a few things with your new traffic.
Look at what keywords are driving the best leads. Google Ads & Facebook give you this information. Try using modified broad match for your keywords. Many times customers are using a wider variety of keywords than you’d guess.
Run your ads very focused on geography, especially if you’re a local agency. If you have a landing page for a neighborhood, set up a campaign for that area.
Look at what landing pages are driving sales & calls.
Look at what areas are driving sales.
Test ad copy and figure out the right messaging. You can use this data to inform any print or display campaigns..
On Facebook, you can get *really* specific with your audiences. Do that. Create an audience of 100 who you *know* would be perfect. Make sure they know about you. Use the campaign to warm up any direct pitch.
Organic Search (SEO) Traffic
Organic traffic (SEO) still might not be the best next channel to pursue after paid traffic. There’s a great big wide world of paid and organic traffic sources, and if you’re working on building a portfolio and just get some experience, this is going to take awhile.
And yet, if you’re playing the long game, setting up your SEO strategy now can have huge payoffs in the end.
Google processes more than 3.5 billion queries per day. And for most queries, most of the clicks go to an organic result. And you’ll know from your Ads campaigns that clicks for competitive keywords can be quite expensive. That’s a cost you don’t have to pay if you rank in the organic results.
So I won’t hide my enthusiasm for SEO. It’s my specialty and is the giant battleship that will keep on going once it’s headed in the right direction.
When you are setting your marketing strategy for your digital marketing agency, you just have to know what it takes to get organic traffic and what it will take on your part to get it done.
Often you’ll just need a handful of really useful posts to prove your expertise. Don’t go after generic topics. Show off your specialty. Do a tutorial on tools that you know your audience is trying to use. Write about an issue that you know everyone is dealing with.
What To Consider
Your first goal when you’re starting an agency is to get clients. Billable hours drive everything (and is what will enable you to invest in other marketing efforts).
Some of your best leads can be in your own circle. Don’t discount the network you already have.
No one will know about your business if you don’t tell anyone about your business. You don’t need fancy business cards, a beautiful website, or even some elaborate marketing funnel. You DO need to tell people what you do.
You do have to walk the walk, but you don’t have to rely on your own area to build your business. If you do SEO and you choose not to use SEO to generate leads, that’s fine — but be prepared to speak to that with potential clients.
What To Avoid
Avoid being a generalist. Yes you need clients, yes you need revenue — but remember the business strategy you set upfront.
Avoid adding additional work without increasing the scope to “win” a client. If clients want additional services and you offer them, great! Let them know how that changes your fees. Earn respect with results, not with price or perceived responsiveness.
5. Define Your Growth Plan
Building a digital marketing agency doesn’t mean you have to become the next big company doing Super Bowl commercials. As I mentioned before, a digital marketing agency can be an agency of one.
You should however, have an idea of how you’d like to grow. Being a one-person company still doesn’t mean you have to do everything yourself. ShivarWeb is made up of exactly 1 person, Nate Shivar, but several amazing contractors help shoulder specific responsibilities. Employees are great once you have a solid book of recurring contracts, but contractors can help you bridge any gap.
As you start to grow, think about the teams, systems, and deliverables you want to have in place to help support your clients.
For your team, would bringing on a full-time copywriter help you sign two more clients? Could you outsource design work or administrative tasks that take up your time?
For your systems, do you have a written system for new clients? Even if you are solo, you need to have a written system that clients pass through. It should be something that you can set out in a contract. You can (and should) find examples for Master Service Agreements (MSAs) & Statements of Work (SoW’s) to build of of. Make sure you have an internal project management system – even if it just lives in a Google Sheet.
For your deliverables, do you have a way to show value to your clients? Do you have a way to gather feedback from them. If you are an SEO, then written audits, keyword maps, and written outreach & content strategies will help make the “magic” of SEO real for your clients. It goes the same for every type of marketing. What format will you use? Who can you talk to within the industry to get a base understanding?
To be honest, this section is the biggest reason to do some short stint with an already established agency. I worked for Nebo Agency for a little over 2 years, and learned more than I could have learned on my own in 10. But working for an agency is not required. You just need to do a bit more thinking & planning.
Doing some advanced planning here will help you scale faster and easier than waiting to figure it out when the workload becomes too much.
What To Consider
There are certain tasks only you can do. What are those? Keep your focus there.
A bigger team doesn’t necessarily mean a better agency. Some of the best marketers I know run with a very lean crew.
Think back to your business vision. Do you have services you want to provide but YOU can’t do? Are there people you can hire that can cover a few different areas (i.e. a writer with graphic design experience)
What To Avoid
Avoid getting caught in the weeds. You can’t make any money if you’re sitting in your inbox for five hours a day.
Avoid thinking of outsourcing as an expense. Crunch your numbers and think value and reinvestment.
Avoid going the “cheap” route when hiring help. You get what you pay for.
Charge what you are worth. If you are making your clients money, then charge what you are worth…and make them even more money!
Conclusion & Next Steps
Starting a digital marketing agency with no experience doesn’t have to be a daunting process full of questions, unknowns, and hurdles.
It does require that you clearly understand what you want out of your agency, who you’re going to help, and how you’re going to help them.
If you are trying to start a digital marketing agency, follow the process and you’ll be all set!
The post How to Start a Digital Marketing Agency with No Experience appeared first on ShivarWeb.
Are you interested in running your own business and being your own boss, but don’t know how to get started? You’re not alone — starting a business from scratch requires a solid business plan and plenty of capital. Even with careful planning, there’s no guarantee that your business will be a success.
But what if there was a way to increase your chances for success with a tried-and-true business model?
Fortunately, that’s where franchises come in. A franchise helps simplify the process of launching and operating your own business. You’ll get the freedom of owning your own business without having to build it from the ground up. However, as with any other business, there are some challenges you may encounter. In this post, we’re going to dive into the world of franchises. We’ll review what a franchise is, how it all works, and help you decide if franchising is the right fit for you.
What Is A Franchise?
Even if you don’t think you know what a franchise is, you’re almost certainly familiar with franchises in some capacity. You’ve probably seen many franchises in your city or town. Fast food restaurants, fitness centers, coffee shops, auto repair shops, retail stores, and other types of businesses may be franchises.
A franchise is a business structure that allows a third-party entrepreneur (also known as the franchisee) to legally operate a business using the trade name, standards, and processes of the business owner — the franchisor.
The franchisee is considered an independent operator, and the franchisor is not involved in the day-to-day operations of the business. However, the franchisor may provide ongoing support in exchange for fees paid by the franchisee. We’ll go into more details on the specifics in the next section.
To put it simply, an entrepreneur can use the name, branding, products, services, and procedures of an established business. This allows the entrepreneur to own a business without starting from scratch while also expanding the franchise.
How Franchises Work
Now that you have a general idea of what a franchise is, let’s explore the specifics of how these business entities work.
A franchise is simply a business entity that is licensed by the franchisor to a third-party — the franchisee. The franchisee can then legally use the trade name, processes, procedures, products, and services of the business. The franchisee gets to take advantage of a turnkey business model that also has minimal startup costs.
What’s in it for the franchisor? In addition to startup costs, there are a number of ongoing fees that the franchisee pays throughout the duration of the licensing agreement. The length of the licensing agreement varies by franchise, but in general, many initial licensing agreements are set for a period of five years with the option to renew the agreement. However, some agreements may be as short as three years, while others may be as long as 20.
As the franchisor builds more relationships with franchisees, the business expands. While the franchisor isn’t directly related in the operations of the business, it does provide training and support — something we’ll cover a little later.
One of the biggest benefits of purchasing a franchise is that startup costs are typically lower than building a business from the ground up. You also have a better idea of what to expect in terms of costs. For example, you may map out the costs of a new business built from scratch, but it’s not uncommon for business owners to find that their actual expenses are much higher than estimated. With a franchise, you have a clearer picture of your startup costs and ongoing fees and expenses. Some to expect include:
Franchise Transfer Fee
While buying a franchise can certainly be less expensive than starting a business from scratch, there are significant fees associated with starting and operating your franchise. As a rule of thumb, expect to pay one-third of your pre-tax earnings toward these one-time and ongoing costs.
Fortunately, there are plenty of funding opportunities that can help cover these costs, which we’ll explore a little later in this post.
Training & Support
When you purchase a franchise, another benefit is the training and support that you receive from the franchisor. This is built into the royalty fees that are paid on an ongoing basis. Your franchisor may provide tech support, customer support, marketing materials, and training. This training and support are based upon the franchise’s proven systems and methods, taking out the guesswork and the added expenses for you.
While the franchisor does have standards in place for operations, the franchisee does have some flexibility in some areas of operating the business. This includes employment standards, disciplinary actions taken by management, who you hire, and the rate of pay employees receive.
What It Takes To Buy A Franchise
While purchasing a franchise takes out some of the guesswork of owning and operating your own business, planning, budgeting, and knowing what to expect are all critical to your success. Before you make the next step toward buying a franchise, consider the following points.
Pick Your Sector
Don’t think that food is your only option when it comes to opening a franchise. While fast food, quick-service, and full-service restaurants are certainly options, there are plenty of other opportunities for you, including:
Salons & spas
Gas stations & convenience stores
When pinpointing what sector is right for you, first consider your own personal preferences. Is there something that interests you, or a sector where you have experience? You should also take into consideration market and industry trends to bolster your chances for operating a successful franchise.
Seek Out Other Franchisees
Still on the fence about what franchise is best for you? Seek out other franchisees and learn more about their experiences — the good, the bad, and the ugly.
There are a number of ways to find other franchisees. During the pre-sale process, you’ll receive the Franchise Disclosure Document, which gives information about the franchise, franchise locations, and other franchisees. Online message boards can also provide information about franchising. Finally, you can connect with franchisees by attending industry conferences, expos, and other events.
Set Your Budget
What you’re willing to spend to own a franchise may help you narrow down your selection. Do your research to learn more about the associated costs with purchasing a franchise. Compare your options, and understand what you can comfortably afford.
Like any other type of business, a franchise might not be profitable for up to one year. In some cases, it may take even longer before you see a profit. Calculate what you can afford, and keep in mind that you will need extra access to capital to keep your business running until it becomes profitable.
One last thing to note is that purchasing an existing franchise is typically much less expensive than buying a new one. However, you should determine if the money you save is best for the long haul. For example, a franchise that is struggling may take much longer before turning a profit.
Another positive aspect of buying a franchise is the funding opportunities available to new franchisees. There are many long- and short-term funding options available including:
Small Business Administration loans
Rollovers as Business Startups (ROBS)
Lines of credit
Unsure of which option is right for you? Check out our post about the best franchise loans.
Determine Your Location
You’ve determined your budget, you’ve selected a franchise, and you’ve explored financing options. Now, it’s time to consider where your franchise will be located. There are a number of considerations to keep in mind when selecting your location, including:
Convenience to customers
Proximity to competitors
Price to purchase or rent commercial space
Many franchisors will help you identify suitable locations for your business that also follow your franchisor agreement.
Select Your Franchise
If you’ve made it this far in the process, you should know what franchise is right for you. You should do your research before you make your choice, as well as due diligence through the pre-sale process. This includes identifying your Unique Selling Proposition and reviewing the Franchise Disclosure Document. Learn more about this process by checking out our article, The Step-By-Step Guide To Buying A Franchise.
Prepare For Opening
Before you open your doors to the public, there are a number of steps you have to take. This includes selecting the right business software, including project management software and restaurant POS software.
Training is also critical before opening your franchise for business. Many franchisors offer a variety of resources, including extensive in-person training. Connecting with other franchisees, attending industry events, and doing online research are additional ways to boost your knowledge and expertise.
Open Your Franchise
Once you’ve covered the previous steps, you should be ready to open your doors to customers. Consider having a “soft opening” to see how everything goes and to overcome any potential challenges that may arise once the franchise is operating. Once you’ve overcome these hurdles, you can host a grand opening for your customers. Make sure to increase your traffic by offering free samples, special rates, coupons, or other incentives that can help get your business off to a strong start.
Is Owning A Franchise Right For You?
At this point, you should have an idea of whether or not a franchise is an opportunity that’s appealing to you. However, if you’re still on the fence, there are a few additional considerations:
Reduced Risk:Â There’s a lower risk of failure with a franchise since you’re utilizing tried-and-true systems/processes and a familiar brand. This isn’t to say that you’re guaranteed success with a franchise. You will, however, have access to resources and tools to help you through your entrepreneurial journey, including marketing campaigns, training, and other assistance.
Potentially Low Startup Costs:Â While startup costs vary, many franchises have low initial investment costs. Franchises including Jersey Mike’s, Great Clips, and The UPS Store all require an initial investment os less than $250,000.
More Funding Opportunities:Â Getting a business loan can be difficult if you build your business from scratch. However, franchising opens up more opportunities for financing, including franchisor financing and other loans specifically for franchisees.
Be Your Own Boss: If you want to become an entrepreneur but you don’t know where to get started, purchasing a franchise may be a great choice for you. While you should at least have some industry experience for the franchise you choose, this isn’t required. You won’t have to think of an idea, find suppliers, and do everything on your own, but you still get to be your own boss.
However, becoming a franchisee isn’t the right choice for everyone. Keep these considerations in mind when making your decision:
Ongoing Royalties & Other Fees:Â Ongoing fees and royalties paid to your franchisor cut into your profits.
Limited Creativity:Â If you want a business that’s truly your own, a franchise isn’t the right option. As a franchisee, you’ll have branding limitations that could prevent you from putting your own personal stamp on your business.
Tarnished Reputation Affecting Profitability: The actions of one franchise could spell trouble for your business. A case of food poisoning or food tampering, bad behavior by employees or management, or a news-worthy negative event could damage the brand’s reputation — including your own franchise.
Shared Financial Information: Your financial information is shared with the franchisor. If you don’t wish to have this much transparency in your business, consider taking another route.
Risk Of Non-Renewal:Â Once your franchise agreement runs out, the franchisor has the option to not renew the agreement.
If the drawbacks of a franchise outweigh the benefits, consider starting your own business from the ground up or acquiring a business that isn’t a franchise.
Becoming a franchisee takes a lot of the guesswork out of owning your own business. You must remember, though, that even though you’re not going at it alone, you still have to invest time and to ensure your franchise is a success. While a franchise does provide the blueprint for aspiring entrepreneurs, it’s up to you to put in the hard work required to build a successful, profitable business.
The post How Franchises Work: The Complete Guide For Entrepreneurs appeared first on Merchant Maverick.
Do you have a tendency to share your knowledge and experience with others? Do you enjoy giving advice that helps others better their businesses â¦ 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, thatâs 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 toÂ 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 doesnât 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 doesnât 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.
Weâll 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. Letâs jump in and get started!
Pick Your Niche
Weâve all heard the saying, âJack of all trades, master of none.â When clients are seeking a consultant, they donât 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 itâs 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, letâs say youâre 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 shouldnât just be something generic like, âI want to help other business owners.â Instead, you should have a more specific purpose in mind. âI help businesses in this industry find and implement the newest and best software solutions to grow their business in just 3 months.â 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:
Human Resources (HR)
After youâve selected your niche, do your research to find out what certifications and licenses you need to legally operate your business. In most instances, youâll 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 youâre knowledgeable about your niche right now, industry trends and changes can occur in an instant. Make sure you stay up-to-date on whatâs happening in the industry to ensure youâre always qualified to assist your clients.
Make Your Business Plan
Even if your consulting business seems pretty straightforward, itâs 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 youâll 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:
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 ownerâs personal tax return. The major drawback of this business structure is that the business owner â you â are held personally liable for the debts and obligations of the business.
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 donât 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 â have limited liability. This simply means that personal assets canât 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.
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 donât 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
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 wonât 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. Letâs 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, attorneyâs fees, settlement expenses, and court costs will be covered up to the full amount of your policy.
If you have employees, workerâs compensation is another type of insurance your business needs. Workerâs 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 workerâs 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, thereâs 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 youâre 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 youâre using your own personal credit cards, you may increase your personal credit score. However, this wonât 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, itâs 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. Weâll 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
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%
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:Â
Employee cards at no additional cost
Travel and purchase coverage
More card details (click to expand)
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
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
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
More card details (click to expand)
Capital Oneâs 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, youâll receive a $200 cash bonus.
Youâll 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, youâll need capital. In some cases, you may be able to use your revenue to fund your expenses and growth. In other instances, youâll need a financial boost from a business lender.
Fortunately, there are many financing options out there if you know where to look. Letâs explore the types of funding available to you, along with our lender recommendations.
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 donât have to worry about making payments to a lender. Youâll also save money because you wonât pay interest or fees that are charged by a lender. On the downside, if your business isnât 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 youâre 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 youâll 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 â also known as equity financing. While you wonât 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, doesnât 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 youâre 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
Time in business: Unknown
Credit utilization: Less than 50%
Credit score: 690+
Borrower requirements (click to expand)
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:
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 youâre 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 isnât a loan, you wonât have to make debt repayments. However, you will have to pay a monthly administration fee.
If you donât qualify for a ROBS plan or youâre 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, theyâll 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
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
Borrower requirements (click to expand)
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.
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 donât 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, youâll 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 â the amount you borrowed â as well as fees and interest charged by the lender. Once youâve 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 youâve 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
Time in business: 6 months
Business revenue: $10,000 per month
Personal credit score: 550
Borrower requirements (click to expand)
Lendio isnât a direct lender. Instead, itâs 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 donât 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 youâre 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 youâre a risky borrower. If you donât meet these qualifications, you wonât 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
Time in business: N/A
Personal credit score: Minimum 620
Business revenue: N/A
Borrower requirements (click to expand)
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.
Upstartâs 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
Weâve 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
Required credit: Fair
Bonus offer: None
Purchase intro APR: N/A
Balance transfer intro APR: N/A
Foreign transaction fee: None
Unlimited 1% cash back on all purchases
Notable perks & benefits:
Free employee cards
Fraud coverage and alerts
Capital One and Visa business benefits
More card details (click to expand)
Capital Oneâs 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
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.
Youâll also need software thatâs 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, youâll 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 wonât be able to pay your expenses or the salaries of yourself or your employees. Without revenue, you also wonât 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 youâll 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
Prospective clients are going to have a difficult time finding you if you donât have a web presence. This doesnât 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 youâve 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
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 doesnât 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 donât 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.
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 — youâll 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.
If youâre 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 youâre 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, weâll break down different business structures and the benefits and drawbacks of each to help you make the most informed decision for your business.
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 isnât 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.
Easy & Inexpensive: There are no costly fees associated with setting up a sole proprietorship. In fact, you donât 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.
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.
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 itâs 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, âpasses throughâ 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 companyâs profits.
Before establishing a partnership, itâs 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
Weâve 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.
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.
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 âsilent partners.â 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, itâs also important to understand the risks and drawbacks associated with this business entity.
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.
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.
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. Letâs explore the differences between each type.
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.
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.
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.
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.
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.
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 canât 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. Itâs 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.
Limited Liability: One of the biggest benefits of an LLC is that all members have limited liability, meaning personal assets arenât 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.
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 youâre 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.
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 canât 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:
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.
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.
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 youâve 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.
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.
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.
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 youâre 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 thatâs 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.
Duda is known as an all-inclusive website builder that was originally created as an easy-to-use mobile website platform for DIYers. It has sinced evolved to help agencies, digital publishers, and hosting companies scale with an quick and easy website platform that helps their clients get up and running ASAP.
Duda is also known for making responsive websites, which means the site fits on any device (i.e. a tablet, phone, computer).
See Duda’s Current Plans & Pricing
Recently, I gave Duda a try for a full Duda review. But before I get into the pros and cons of my Duda review, let’s dive into an overview about tools to build a website.
There are so many considerations to take into account when choosing a website builder — and really, there are a thousand ways to get what you want in the end in terms of functionality, convenience, pricing, etc. The thing to remember is: whether you’re building a simple personal website or running a business, the way you build your site has a lot of consequences.
In the long-term, it affects your versatility, functionality, and, of course, your brand. In the short-term, it can certainly add/take away a lot of headaches. That said, just like choosing a physical house or office, there is no such thing as an absolute “best” or “top” choice. There’s only the right choice relative to your goals, experience, and circumstances.
What Is Duda?
On the wide spectrum of website building solutions, Duda lives on the end that is all-inclusive and provides everything you need to get started and grow your website. It contrasts with solutions where you buy, install, and manage all the “pieces” of your website (ie, domain name, hosting, software) separately.
Using Duda is sort of like leasing and customizing an apartment in a really classy development instead of buying and owning your own house. You’re still in control of decor, cleaning, and everything living-wise – but you leave the construction, plumbing, security, and infrastructure to the property owner. That point is key because there’s usually a direct tradeoff between convenience and control.
Everything may fit together just right with a website builder like Duda, but that may or may not be what you’re looking for.
As far as competition, Duda competes with all-inclusive website builders like Weebly, Wix, Squarespace, Gator, GoCentral, Jimdo, and WordPress.com.
Compared to their direct competition, they focus on speed, ease of use, and responsive design (again, web jargon for making your website mobile device-friendly). Duda offers several website templates you can customize, but it also allows you to build your own sections from scratch, making it a solid solution for both DIYers with zero website experience and those who consider themselves a bit more advanced.
Duda also skews its marketing toward agencies, digital publishers, and hosting companies with features like content import, PageSpeed optimization, site personalization, and more (but we’ll get to that later!).
One other quick aside – a disclosure – I receive referral fees from all the companies mentioned in this post. My opinions & research are based on my experiences as either a paying customer or consultant to a paying customer.
Pros of Using Duda Website Builder
Here’s what I found to be the pros of using Duda website builder — not just in comparison to popular builders like Weebly and Wix, but as an overall website solution.
Free Trial Plan
One of Duda’s biggest pros is that they let you try the platform, risk-free, for 30 days. You don’t even have to put a credit card when signing up — you just create an account and get building.
Duda doesn’t restrict your access to any of the features they offer when using the free trial option — it’s as if you’ve bought a plan and are already up and running with them.
This is a great feature if you’re looking to test out a website builder before committing. The thing to keep in mind here though is that the free trial gives you the features of Duda’s mid-tier plan, which includes things like team functionality, content import functionality, etc.
If you were to downgrade after your 30 days, you would lose those features. Not a big deal if you’re not using them, but could also be time wasted if you do use them and then have to make drastic changes to accommodate the new plan.
Straightforward Sign Up Process
Another pro of using Duda is how easy it is to get up and running on the platform. It’s basically just one step — enter your information to create your account, and you’re in! Again, if you’re using the free trial, you don’t even have to pull out a credit card.
This is great for DIYers who want to get up and running as quickly as possible without the hassle of creating a detailed account, selecting a niche, etc.
Simplicity + Flexibility
Duda is also seriously simple to use, which makes it hard to mess up your website design. Once you choose a template, entering your own content is super straightforward.
But Duda also combines ease-of-use with flexibility by offering pretty extensive design options. For example, by clicking the “plus” sign, you can add new, pre-made sections to the templated pages you’ve selected.
Or, you can create your own section from scratch.
This makes Duda a great option for both DIY-ers who want something that’s easy to customize and those who want to add their own design elements without having to hire an experienced designer and developer to make it happen.
Product Integration + Functionality
Another benefit of Duda is their integrations. First, Duda offers hosting on AWS (Amazon Web Services), which can be both a pro and a con depending on where you fall on Amazon.
The pros are that your site can and will still go down (it’s inevitable), but if you’re down, then big brands like Uber, AirBnB, Amazon, Reddit, etc. are down too… which means whatever is causing the downtime is likely to be fixed very quickly. Your site also has access to the best security and storage and speed people in the world.
But the cons are that since your hosting is bundled with Duda, you can’t actually access your files except through Duda (*although Duda does provide a data export). There’s also a chance that pricing changes on the AWS side will affect pricing with Duda. And of course, there’s some people who just don’t want to buy from Amazon… so if you’re in that boat, Duda probably isn’t for you.
Aside from offering DNS and hosting services, Duda also offers some pretty advanced functionality built in to its platform, like access to your website’s HTML and CSS, eCommerce functionality, content import, etc.
This additional functionality gives Duda a unique edge, because it builds in more control while still giving customers the convenience of an all-in-one platform. Typically, these types of website builders see a tradeoff between convenience and control, but Duda does a good job of giving you a decent dose of both.
Just remember that not all of these features are available with all plans, so make sure you do your research.
While this pro is only available with the mid-tier plan and higher, it’s a pretty solid benefit. Duda features the ability to work with your team on your website, which means you can leave comments on the design of the website for your team to review.
This is functionality is pretty nifty if you’re a small agency, business owner with a team, or even a solopreneur who wants a designer to build your site in Duda but YOU want an easy way to leave comments.
Cons of Using Duda
But of course, no review would be complete without looking at the downsides. Every piece of software will have complaints. Let’s look at the specific cons I found with using Duda as your website builder.
Pricing + Plans
While Duda has a lot of amazing features, they are on the pricier side, especially when you start comparing features across their plans. For example, if you wanted a basic plan, you only have access to email support, and if you were creating an ecommerce store with a basic plan, you could only have ten products.
When you dig a bit deeper, you can see that a good bit of functionality is reserved for Team and Agency plans, especially when it comes to Team Collaboration. And when it comes to Duda’s features that give you the most control over your website, like widget builder, website export, and API, those are reserved only for the Agency plan.
Related to pricing, another con of Duda is its free 30-day trial. Don’t get me wrong — having the ability to use Duda’s awesome features for 30 whole days is great! But as I mentioned above, the trial uses the Team plan… which means if you don’t want to pay a higher price point, you’re going to lose a few features and functionality when you move your website to the basic plan.
There also isn’t a free plan for those who just want a basic, short-term website that uses a subdomain. This isn’t a make-or-break con, but it just depends on what you’re looking for. If you need an ultra basic website builder for a short project, you may be better off with a different website builder that’s either less expensive or offers a free plan, no strings attached.
My team, my clients and I have seen and worked with a lot of different software companies. One thing that I’ve noticed over the years is that companies have to follow not only the demands of their current customers, but also the demands of their business model. A company might be “good” or “bad” right now, but to know how they’ll be in a few years, it pays to spend a couple minutes thinking about their business model and how they’ll evolve to meet customer and market demands.
For example, anyone who understands that Facebook’s customers are their advertisers, not their users, can understand how & why they do the things they do. There is no inherently “bad” or “good” business model. Every model has tradeoffs. It just pays to know where you, the customer, fit in the picture, especially when you are building something as critical to your business as your website.
Duda is a private, venture funded company. They are based in Silicon Valley with venture capital partners. They’ve done several fundraising rounds since 2010.
Venture-funded companies typically want 1 thing – growth. Sure, they want to make money at some point, but that will usually be at the “liquidity event” (ie, a stock market IPO or company purchase) – not with quarter by quarter profits.
In fact, most venture-funded firms will deliberately lose money if that means growing their customer base. So what are the tradeoffs?
The huge upside is that Duda’s customers will probably get more features, better support, and cheaper pricing than they would otherwise get. The venture capitalists are subsidizing your awesome product.
The huge downside is that Duda’s business model could change (e.g., “pivot”) at any moment. They want customers and revenue – but they want to follow the growth of customers more than anything else.
A publicly traded is solidly committed to their market strategy. A non-investor funded but private builder like InMotion’s Website Creator is responsive to the founder’s vision and customer demands.
Right now, Duda is serving all markets, including DIYers. But they say right on their homepage who they *really* want to serve –
If you are an agency or hosting company – this is great. And if you are building a short-term project, it’s great. But if you are planning a long-term site, you should keep in mind that their product development might shift away from DIY features and more to project management features.
Duda Review Conclusion
Duda certainly makes getting a website up and running easy, and when you factor in their advanced features that give you more control, it makes the platform a pretty solid website builder for small agencies and even DIYers who need something that’s easy-to-use but can also scale.
Check out Duda’s plans here.
However, like most all-inclusive website builders, there does come a point where there’s a tradeoff between convenience and control, especially when you factor in price. Duda’s pricing (and market positioning) leaves something to be desired, especially when you get into the higher priced plans.
If you’re looking for a website platform that has that many advanced features that allow you to control more of your site, you’d probably be better off with something like Wix for a drag & drop builder or using a self-hosted website builder like Website Creator or Weebly if you want an ecommerce component.
Not sure Duda fits your needs? Check out my quiz to find what the best website builder is for you based on your preferences.
The post Duda Website Builder Review: Pros, Cons, and Alternatives appeared first on ShivarWeb.
There are a lot of Mac people out there. We probably all know one of them — heck, you might evenÂ be one of them. Someone who likes a little style to go with the substance, someone who values accessibilityÂ over adaptability, someone who just really likes those clean, minimalist lines and brushed aluminum unibodies. And who can blame Mac lovers? Apple provides products that fulfill more than just a computing requirement; they have come to embody an ethos, a lifestyle, a holistic paradigm that values simplicity and ease-of-use. So while die-hard PC fans will shake their heads in numb despair at what they consider to be over-priced products that are capable of far less than their own customized, self-built, cost-effective machines, I think they are just missing the point. Macs are cool. And easy to use.
And frankly, there are some parallelsÂ here with Project Management. Sure, you can manage your projects using a spreadsheet or some open-source program. Heck, you could probably keep your tasks and projects straight with a big whiteboard and copious piles of sticky notes. But you are aÂ Mac user.Â If you made the choice to use a slick, modern computer, you shouldn’tÂ be bumming around using some clunky old software.
With that in mind, here are Merchant Maverick’s top 5 project management apps for Mac users, selected for their ease-of-use, general aesthetics, OSX desktop versions, and more.
RedboothÂ (read our review) has always been one of our favorites here at Merchant Maverick, and it remains so to this day. The excellent combination of simple interface, excellent visual design, and generally affordable price make it easy to recommendÂ to just about anyone wanting to manage tasks and projects.
One of my favorite things about Redbooth is how flexible it is. You can use this app for basic task management (adding, working on, and completing tasks), and it works like a charm. But you can also add levels of detail, scan for workload analysis, create subtasks, and schedule your team with minute detail. It really is a joy to use, and I don’t find myself saying that about software very often.
I mentioned above that Redbooth is affordable, and it is, relative to other project management apps.Â There is a free version of the software that is somewhat limited in scope but still adequately functional. More interesting is the Pro version ($9/user/month) that gives all users access to free HD meetings with Zoom, as well as reporting features and external users. If you are willing to pay for the Business plan ($15/user/month), you can add assignable sub-tasks, business reporting, and priority support to the mix.
Overall, Redbooth definitely fits in well with the Mac user ethos: it is easy to use, beautiful to look at, and has the added bonus of being pretty affordable. Add to that the OSX app that allows you to use it directly on your computer, and you have what I would call a winner!
If you are anything like me, you are sometimes able to get yourself into a hyper-productive state of being where you feel as though you could accomplish an entire week of tasks in about three hours. I think I am not alone in referring to this state as “the flow.” It is that state of ultimate productivity that Flow (read our review) was named for.
While slightly less attractive than Redbooth, Flow is no slouch when it comes to visual design. In terms of usability, it is, if anything, even easier to use than Redbooth. Add to this incredible ease of use an advanced feature set that includes assignable sub-tasks, communication tools, and email integrations, and you have what I would consider a very tempting option.
And I haven’t even mentioned the price! If you pay on an annual basis, Flow is yours for the low, low price of four dollars and eighty cents a month. That is almost a painfully low price for a state-of-the-art project management app. There is also a $7.99/user/month option that comes with resource management and project timelines, and an Enterprise subscription with single sign-on, among other things.
So, in summary, we have a positively cheap project management app that is nearly comically easy to use. On top of that, it has an OSX dedicated desktop app. Sounds to me like any Mac user will find using Flow remarkably easy to get into the… Flow… with.
I’ll show myself out.
All of the apps I am covering here today are easy to use. But of all of them, the one that most impressed me during my test was Clickup (read our review). Now, I know that in some ways, ease-of-use is subjective, but seriously! Clickup is as easy to use as bacon is to eat. And as an accused Pacific Northwest Hipster, I can confirm that bacon is very, very easy to eat.
Clickup divides work into Spaces, where different teams can find their various projects and tasks. These can be seen in box, list, and board view — whatever suits you best. It must be said, however, that Clickup really amounts to an extremely well-made task management system, so if you are looking for something more powerful, this might not be the app for you. On top of being easy to use, Clickup is gorgeous. It will look incredibly clean and slick on your Mac’s retina displays. Especially if you use the desktop app designed of OSX.
Clickup’s pricing is simple and affordable: you can get it for free, or you can pay $5/person/month in order to get more file storage and onboarding training straight up from the designers.Â With pricing like that, I honestly feel like you owe it to yourself to at least try this app for yourself; there is nothing to lose!
When all is said and done, Clickup is a beautiful and simple task management system. If that is what you are looking for for your business, Clickup is probably my number one recommendation. If you need something with more horsepower, keep looking through this list!
4) Basecamp 3
BasecampÂ (read our review) is a byword for ease of use and simplicity in the project management world. So it seems like Basecamp should fit right in with our Mac-user Ethos, yes?
Combine legendary usability with a desktop app designed for Mac OS, and you have a user experience that is bound to impress. Having said that, Basecamp is not theÂ most attractive app I have used. It is a little cartooney, rather than clean. It feels more “living room” than “glass-walled office.” Is that reason not to use it? Not exactly, but honestly, image is part of this. Design is part of why you use a Mac in the first place, right? So your software should be similarly designed.
Fortunately, Basecamp really delivers in terms of features, focusing especially on communication tools that help keep your whole team on the same page, whether you all work in one building, one continent, or just one planet. Like Clickup, though, this app is only slightly more than a task management app. You may need to look farther afield if you need more than that.
Basecamp’s pricing is a little different than the other programs we have looked at today. Instead of charging a small price per user, Basecamp asks for a high upfront price ($99/month)Â but allows for unlimited users. This style of pricing is most beneficial for businesses planning to use their project management app with more than 20 users.
Basecamp is a solid choice for anyone needing task or basic project management, especially for medium-sized businesses or businesses with employees working remotely. In terms of our Mac-User ethos, it scores slightly less well due to the visual design, but it is still intuitive and simple. My advice? Go give it a try.
5) Teamwork Projects
Teamwork Projects (read our review) attempts to achieve the difficult task of building a full-featured project management app that is also easy to use. By and large, I think they have accomplished that. Including far more features than the likes of Clickup and Basecamp, Teamwork Projects can handle your tasks, projects, portfolios, communication, financials, and more. With an impressive integrations list that helps ensure you can continue using other software alongside this one, Teamwork Projects makes it easy to switch over from another task management product.
At the same time, this is an intuitive app to use. Notice I am not saying it is simple; it’s not. There is a decent amount to learn when you are just getting started with Teamwork Projects, but it might help to think of the app like an overstuffed leather armchair. There is a lot going on underneath, but it is all there to support you.
Teamwork Projects is available in four subscription levels. There is a free version, though with a maximum of five users and just 100 MB storage, I doubt many will stick with this option. You can get most of the good features for $9/user/month, though if you want single sign-on or custom URLs, you will have to go for the more expensive options.
Teamwork Projects is not the most beautiful app on this list. And it is not the easiest to learn or use. However, if you are looking for a robust project management solution for any platform — and especially for your Apple device — Teamwork Projects is a fantastic choice. I recommend trying the free plan to see if this app is for you.
There is no one answer to which of these five options you should settle on for your own business. If you need simple, fast, and efficient task management, you might be in the market for the likes of Basecamp, Clickup, or Flow. If you need a few more teeth for project-crushing, Teamwork Projects or Redbooth might be more in line with your needs.
In any case, all you Mac users out there can rest assured that each of the above apps will run beautifully on your beautiful machines.
The post Top 5 Project Management Apps For Mac Users appeared first on Merchant Maverick.
There are over 55 million freelancers in the US. With perks like being your own boss, setting your own schedule, and the flexibility to work from anywhere, it’s easy to see why freelancing is becoming such a popular choice.Â Whether you are self-employed full-time or are freelancing on the side to earn some extra income, there are key software tools that can help you run a more effective and profitable business — the most important being accounting software.
As a freelancer, it’s easy to focus on growing your business, finding new clients, creating marketing campaigns —Â anythingÂ but accounting. However, having a strong accounting process and being in control of your business’s finances is the key to running a successful business.
Luckily, there are plenty of easy to use, affordable accounting solutions that will help you manage your freelance finances and taxes quickly so you can get back to doing what you love.
In this post, we’ll share the top accounting software for freelancers. We’ll also share some other great freelance tools that you should know about to help your business succeed, including everything from email marketing software to website builders to mobile payment apps and more. We’ve spent hours researching and testing software so that you can find the perfect software solutions to run your freelance business.
$10 – $17/month
$0 – $18/month
Size of Business
Ease of Use
Number of Users
Number of Integrations
Cloud-Based or Installed
iOS & Android
iOS & Android
iOS & Android
Characteristics Of Good Freelance Accounting Software
In terms of accounting software, freelancers have very specific needs. Most traditional small business accounting software simply won’t fit the bill. Freelancers need an easy-to-use financial management solution designed specifically for the self-employed. Here are some of the key characteristics a good freelance accounting software should have:
Affordable:Â For freelancers, every penny counts. With a slim or nonexistent accounting budget, freelancers need a solution that is free or offers affordable, low monthly payments.
Easy To Use: Good accounting software should be easy to use as most freelancers don’t have time to spend hours balancing the books. Many also may have little to no previous accounting experience so they need something that is easy to learn and understand.
Time-Saving Automations:Â All accounting software should feature automations, but freelancers are in particular need of any way to save time. Standard automationsÂ include automatic receipt uploading, mileage tracking, and live bank feeds.
Manage Personal & Business Finances: While freelancers should open a separate business banking account to safeguard against tax audits, this simply isn’t the reality for many self-employed individuals. Because of this, many freelancers need to be able to separate their personal expenses from their business expenses using their accounting software
Good Organization: As a freelancer, it’s easy to put finances on the back burner, but knowing your exact income and expenses is key to running a successful business. Accounting software should help you stay organized, run key financial statements, and make more informed business decisions.
Tax Support: With estimated quarterly taxes and ever-changing deductions, freelance taxes can be overwhelming.Â The best freelance accounting software will include tax support to help you manage your self-employed taxes.
Support Resources:Â Good accounting software will also provide you with ample learning materials to help you better your business.
We weighed all of these factors when selecting the best accounting software for freelancers. Each of the top three accounting options displays many, if not all, of the features listed above to help make managing your freelance finances as simple as possible.
1) QuickBooks Self-Employed
Overall freelance accounting and tax support. Ideal for filing directly with Turbo Tax.
Created in 2014, QuickBooks Self-Employed was designed specifically to help freelancers manage their finances and file their taxes easily. QuickBooks Self-Employed is incredibly easy to use, offers great mobile apps, and has the best tax support of all three programs on this list. The software helps you calculate your estimated quarterly taxes, track your mileage, find other deductions like the home office deduction, and even has a Turbo Tax integration for easy filing. On top of tax support, QBSE also helps freelancers keep track of their income and expenses.
The software is ideal for freelancers looking for tax support, a way to separate personal and business expenses, and basic expense tracking.
Suited for freelancers
Limited invoice features
Calculates estimated quarterly taxes
No state tax support
Easy to use
Turbo Tax integration
QuickBooks Self-Employed offers two pricing plans ranging from $10 – $17/month. The difference between the two is that the larger plan includes a built-in Turbo Tax integration and the ability to pay estimated quarterly taxes online.
QuickBooks Self-Employed supports a good amount of features, especially where taxes are concerned. Here’s an idea of what QuickBooks Self-Employed has to offer:
Track income and expenses
Separate personal and business expenses
Record tax deductions
Fixed asset management
Calculate estimated quarterly taxes
Ease Of Use
QuickBooks Self-Employed is incredibly easy to use. It has a modern, well-organized UI that takes very little time to learn and offers strong mobile apps that are also easy to navigate.
QuickBooks Self-Employed’s customer support has its pros and cons. There’s no phone support, but there is a live chat feature if you want to get in touch with a representative directly. The good news is that QBSE provides a great selection of learning resources for freelancers including a comprehensive help center and a small business center chock full of business advice.
QuickBooks Self-Employed is one of the best accounting and tax support solutions out there for the self-employed. The software offers the most advanced level of tax support on the market, and while this isn’t a full-fledged accounting app, it allows freelancers to manage their income and expenses.
Read our full QuickBooks Self-Employed review to find out if this software is right for your business.
2) AND CO
Freelancers looking for strong accounting, good customer support, and the ability to create and send contracts to clients.
Founded in 2015, AND CO is an up-and-coming freelance accounting software that was recently acquired by Fiverr, one of the leading freelance marketplaces. The software is easy to use, offers great customer support, and provides traditional accounting features like time tracking and project management. While the software does not offer tax support, it does have a one-of-a-kind contract feature that allows you to create legal contracts for projects that are compliant with the Freelancers Union. This allows you to dictate who retains rights to your work and accept signatures directly from clients.
AND CO is ideal for freelancers who don’t need the extra tax support of QuickBooks Self-Employed and would rather have more traditional accounting features, contracts, and better customer support.
Suited for freelancers
No tax support
Easy to use
Unsuited for product-based businesses
Good customer support
Strong mobile apps
AND CO has a free plan for freelancers with a single client and a paid plan which costs $18/month. The larger plan includes unlimited reports and more advanced proposals and contracts.
While AND CO may be lacking in tax support, the software has a lot of great features going for it. Here are some of the features AND CO has to offer:
Ease Of Use
AND CO is incredibly easy to use. The software was originally designed solely as an iPhone app so the mobile apps are also easy to navigate.
AND CO offers great customer support. Representatives are generally kind and quick to respond to questions. The company also offers great business tools and support resources for freelancers, as well as all of Fiverr’s extensive freelance resources.
AND CO is a great accounting and finance management tool for freelancers. The main drawback is that there is no tax support. However, you won’t find such developed proposal and contract features anywhere else.
Read our complete AND CO review to see if this freelance tool is right for you.
Freelancers looking for a complete accounting solution for free.
Wave is a free accounting software solution that offers an incredible number of features for $0/month. While the software wasn’t designed specifically for freelancers like QuickBooks Self-Employed and AND CO, Wave is one of the best accounting programs to fit the needs of freelancers. It’s affordable, easy to use, and allows business owners to separate personal and business accounting.
The software is ideal for self-employed individuals looking for a full accounting solution or those who need an affordable way to manage their freelance finances.
Easy to use
Poor customer support
Good feature set
Limited mobile apps
Positive customer reviews
Wave only offers one accounting package and it’s completely free. There are no user limits or feature limits. You get all of the great features of Wave for $0/month. The only extra costs are payment processing, payroll, and professional bookkeeping services.
Of all three options on this list, Wave offers the most features. While you won’t find tax support, Wave does offer strong accounting and is full-fledged accounting software. Because of Wave is actual accounting software, it’s the only program on this list that will allow you to actually balance the books. Here are the features you’ll find with Wave:
Ease Of Use
Wave is well-organized and its modern UI is easy to navigate.
Wave offers many great support resources; however, getting in touch with an actual representative is difficult. There is no phone support and response times are slow.
Wave is an affordable accounting program that gives you strong accounting and tons of features without breaking the bank. The software does not offer tax support, but it does offer payroll, making it a scalable solution if you plan on growing your freelancing business. The professional bookkeeping services are also great for freelancers who aren’t comfortable doing their own accounting or simply don’t have the time.
Read our full Wave review to see if this accounting software is right for you.
Other Great Freelance Tools
Your freelancing business is your baby, and as it takes a village to raise a child, it can also take an army of integrations to run a business. There are tons of great freelancing tools that can help you manage and grow specific areas of your business, like email marketing, invoicing, ecommerce, and more. Here are some of the top freelance software tools we recommend.
The Best Invoicing Software For Freelancers
If your freelance business reliesÂ heavily on invoicing and isn’t quite ready for all of the other features included with accounting software, invoicing software could be a simpler alternative to meet your business needs.
Zoho Invoice is an easy to use, cloud-based invoicing program with incredible invoicing features. With over 15 invoice templates to choose from and international invoicing options, Zoho Invoice has a lot to offer. Read our complete Zoho Invoice review to learn everything this software is capable of.
Invoicera is also a could-based program with a good feature set and attractive invoice templates. A forever free plan and over 35 payment gateway integrations are just a few of the perks of this invoicing option. Read our complete Invoicera review to learn if this software is right for you.
Visit our invoicing software reviews for more options or compare our top favorite invoicing solutions for small businesses.
The Best Receipt Management Software For Freelancers
Business owners are all too familiar with the dreadedÂ receipt shoebox. Receipt management software or expense tracking softwareÂ can help freelancers get organized and handle reimbursements with ease.
Expensify is a cloud-based expense management solution with mobile receipt scanning, expense approval workflows, and next-day expense reimbursements. The software also integrates with key accounting programs for a seamless expense tracking experience.
Shoeboxed is also a cloud-based expense management solution with receiptÂ scanning, mileage tracking, expense reports, basic CRM, and even tax prep. Shoeboxed also integrates with key accounting programs.
The Best Payment Processing Software For Freelancers
Need to accept mobile payments from your customers? Mobile payment apps allow freelancers to accept payments anywhere — whether that be at a home show, a small storefront, or even a client meeting at Starbucks. If your freelance business could benefit from accepting payments on the go, mobile payment processing is a must.
Square is one of the most popular mobile payment apps. It offers affordable flat rate pricing and free tools for selling online, making it easy to accept payments from your customers in multiple ways. Read our complete Square review to learn how Square could benefit your business.
Take a look at our other mobile payment processing reviews or compare our top five payment processing solutions for businesses.
The Best Website Builders For Freelancers
A website is key for many freelancers who sell goods online or who need a professional online portfolio to showcase their work to clients. Luckily, there are plentyÂ of affordable, easy to use website builders that can give yourÂ freelance business the edge.
Wix is an easy to use website builder that is ideal for ecommerce and blogging. Wix offers a compelling free version with unlimited pages and hundreds of customizable templates to choose from. Read ourÂ complete Wix review to learn more about this affordable website solution.
Squarespace is a website builder that is perfect for ecommerce and blogs While there’s no free plan, the software offers amazing templates with a huge degree of customizability. Read our complete Squarespace review to see if this website builder is right for you.
Read our other website builder reviews and ecommerce reviews to find the perfect solution for your business.
The Best Email Marketing Software For Freelancers
One of the most challenging parts of freelancing is finding clients. Email marketing software can be a great way to market your services and target clients so you can grow your business.
MailChimp is an easy to use email marketing software with affordable payments. The software offers email campaigns, email automations, and even analytics and reporting. Read our complete MailChimp review to learn how this software could help your business.
Benchmark is another great email marketing option that is easy to use and offers good customer support. The software has hundreds of templates to choose from and the unique ability to send video emails and online surveys. Read our complete Benchmark review to see if this software is right for your business.
Read our other email marketing software reviews or compare the best email marketing solutionsÂ to find the right option for your business.
Picking The Perfect Freelance Accounting Software
Running a freelance business can be difficult, but with the right tools, you can set your business up for success. With accounting solutions like QuickBooks Self-Employed, AND CO, and Wave, you can manage your finances and gain valuable insight into your business’s income and expenses.
QuickBooks Self-Employed is ideal for freelancers in need of tax support; AND CO is ideal for legal, professional contracts; and Wave is ideal for the complete accounting package. Identifying your freelance needs and examining your current financial process can help you decide which program is the perfect fit for your business.
Then ask yourself, what other tools could benefit my business?
Email marketing software could help you grow your clientele. A website builder could help you create a professional brand. A payment processing app could help you increase your sales. Here at Merchant Maverick, our goal is to help you find the best software to help your business succeed. We have hundreds of reviews across multiple software industries so you can find the perfect software combo. Check out our comprehensive reviews and our other freelance resources as well.
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$10 – $17/month
$0 – $18/month
Size of Business
Ease of Use
Number of Users
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Cloud-Based or Installed
iOS & Android
iOS & Android
iOS & Android
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