[This article was written by John Packham.]
Many small business owners start out working for themselves – by themselves. This often occurs because they run a low-key side business while they continue to work for their day job. While it can take longer to get a business up and running this way, the financial security that comes with having a day job is important to people. But what about when the work starts to pile up and you find yourself thinking that it’s time to expand?
You have several choices at this point: you could continue to keep your day job and run your side business, but refuse work or spread it out over a longer period of time. That might work, but your clients might not be willing to hang around because you have a sales report due to your boss on Monday. Another option would be to hire a part-timer who could help you with the workload, but the truth is that you could probably hire two part-timers and still need more help. A third option is to go full-scale and invest what you have into an agency, hire some full-time help and get this thing off the ground for real.
Scaling Up Takes A Lot of Work
But making the move from solo business owner to agency owner takes a lot of work. For starters, if you have been operating under the premise of “self-employed”, then you’ll need to officially register your business, find a location and use negotiation tactics for rent, increase your insurance, place ads for help, interview, hire and train additional staff, work out payroll details, ensure there is enough money in the bank to cover payroll deductions and remittances, and more.
Depending on the kind of agency you will run, you might consider incorporating your business. While this may lead to an additional cost up front, it can provide you with a great deal of protection down the road. Whenever you are working with client product, you want to ensure you have the proper liability insurance, but you want to ensure that you – personally – are not liable for the company. Incorporating your business can provide an extra layer of protection for you and your employees.
The Many Benefits of Incorporation
What’s more, incorporation can provide a number of benefits including the ability to draw dividends from your business and separate your personal assets from your professionals ones. It might not be on the top of your mind to talk about protection when you own a business, but when you scale up from working in your basement as a solopreneur to getting a space to call your own, hiring employees that represent your company to the forward-facing world, and investing in something bigger than yourself, you want to make sure you do it right.
Incorporation can help protect what you’ve built so when the time is right to make the move from solopreneur to agency owner, consider the benefits of incorporation to build the best business you possibly can build.
John Packham: Having grown up in a family owned business, and now working as the Content Director for Karrass – a company specializing in negotiation training for businesses – John is grateful for the many opportunities he’s had to share his passion for business and writing.