Step 5 Worksheet: Creating Your Business

10 Business Steps for Your Yawp

1. First, decide just how serious a business you want.

A Yawp is about expressing a passion; for many Yawpers, any profit is secondary. Others treat that more seriously. Think if yours is a Yawp that has a business side or if it’s more of a Yawping business—there’s a big difference! Pinning down just how much a business you expect to take shape will determine other decisions. Think, too, how it fits with other things you may already be doing. For instance, some people can Yawp as an element of a business that’s already going great guns. In that respect, a Yawp may be an added activity, not a new one on its own. That will effect how you manage it.

2. If it’s new, think about how formal a business you may need or want.

Blunt truth—there are people out there Yawping making serious money who haven’t taken several steps associated with a business, such as getting a license or incorporating. We don’t advocate this, but we know it happens. On the other hand, there are advantages to setting things up in a more formal manner. Consider these when weighing just how far you wish to go.

3. Think about a license.

In many places, technically, yes, you do need a business license if you earn income from your Yawp. Do a lot of businesses—Yawps and others--bother? No. But, it’s a good idea to check to see if a license is necessary—and what penalties are in place if you don’t have one. It may seem unnecessary, but getting a business license—particularly if you’re building your Yawp into a serious business—may be a good idea. On the off chance you get busted for operating without a license, the fines may be far more expensive than the cost of the license.

4. Think about a separate bank account.

Again, many running a business don’t bother with this step. And, if you keep your Yawp business under your own name, it’s not strictly necessary (see #6.1 below). But, a separate bank account to handle funds specific to your Yawp is never a really bad idea. First, it keeps your Yawp funds totally separate from your personal money. It’s also a simple destination for any sort of payment that may come electronically. And, should the topic of taxes ever come into play, having a separate bank account makes things much easier.

5. Look into simple ways to accept payments.

If your Yawp develops into a profit vehicle where others are buying something from you—say, research, articles, reports or even tangible products—you’ll need to consider how they can best pay for those goods and services. Online systems such as PayPal make that easy to set up and easy to manage. Not only are these convenient and cost effective, they’re good business—visitors and readers can buy things on the spot rather than having to mail in a check.

6. Consider incorporating or other formal organization.

Again, lots of people who Yawp don’t bother with this. But there are advantages—often, significant ones. First and foremost is protection—certain structures offer legal protection in the event of legal problems (say, you piss someone off with your Yawp and they sue you for libel.)

A formal structure keeps them from coming after any of your personal assets. And, if your Yawp is a significant money maker, you may save money on taxes. The downside is that record keeping is much more demanding.

Several formal options:

1. Sole proprietorship. The simplest choice. Here, you and your Yawp business are one and the same.

a. Advantages—Simple, little or no special paperwork. You also file taxes under the same return.
b. Drawbacks—No legal protection.

2. Partnership—Here, two or more people share responsibilities for the Yawp business. Each can profit from the Yawp.
a. Advantages—Less risk (and work) with more than one person sharing the load.
b. Drawbacks—Little in the way of legal protection. All you’re doing is sharing the risk.

3. Limited Liability Corporation (LLC)—This is something of a cross between a partnership and a corporation. It must have at least two owners.

a. Advantages—Protection of personal assets. Also easier to set up than a conventional corporation.
b. Drawbacks—Tax liability. LLCs are subject to additional self-employment taxes.

4. General Incorporation—This is the most common—and most involved—form of legal business structure. It makes available a number of options, including a board of directors and shareholders. Within this is something called an S Corporation, which offers specialized tax considerations.

a. Advantages—Legal protection, great flexibility.
b. Drawbacks—More expensive to organize and maintain. Also more complicated.

7. If you want to make it legal, consider how to do it.

If it seems prudent to make your Yawp a formal structure, there are any number of ways to do it. You can always work with an attorney to draw up and complete whatever paperwork if necessary, although this is the most expensive option. If you do this, make sure the attorney has a business specialty and can advise you as your Yawp grows and develops.

You can also set up a legal structure online. Sites such as help you choose the structure that’s right for you and walk you through all the necessary steps. Many also offer reference and resources for any question that may come up. Advantages: convenient and less expensive. Drawbacks: no one person who knows your Yawp to turn to for advice.

8. Check out insurance.

This is something you may or may not need. But, remember, we live in a litigious society where people get sued for all sorts of seemingly innocent things. That risk may increase if you are selling goods or services that someone can misuse—or, by the same token, you have a controversial Yawp that some may consider libelous. Talk to an insurance agent to see if any sort of insurance protection may be a good idea. It never hurts.

9. Investigate taxes.

This, like other topics, depends on your Yawp. If yours earns little money or your structure is relatively simple, taxes may be largely moot. But, if your Yawp really takes off financially, you’ll have to consider taxes one whatever you earn. How much you may pay in taxes (and how you pay them) will depend on the legal structure of your Yawp.

There are two options to get solid tax advice—either invest in tax software such as Turbo Tax or form a relationship with a tax pro, such as a Certified Public Accountant or an Enrolled Agent (these are tax specialists). They’ll give you the lowdown on what your tax situation is and how best to handle it.

10. Find help when you feel you need it.

Running a business is foreign to most of us. That means it can be invaluable to know to whom to turn if you need guidance. We’ve mentioned attorneys and tax pros already. Other sources:

a. The United States Small Business Administration (USBA)—A substantial resource for small businesses, from starting one to keeping it growing. Online at www.sba.gov. If you live outside the United States, look for a similar organization.

b. Nolo Press- A great source for business books, software, forms and other material. Online at.

c. Local chambers of commerce—These may refer you to resources and support for small business in your community.

d. Nearby colleges, universities and other schools—Many schools offer resources for small business, from guidance from faculty members to student interns who will work for free. Also investigate business incubators—these are common programs at many schools and are geared to starting small businesses and helping them develop.

Five More Solid Business Ideas

1. Keep good records. If you make any money with your Yawp, keep track of any record that documents what you earned. Put these into a folder and update as needed.

2. Track your deductions. Deductions are expenses that reduce the amount of tax you have to pay. To do that, they have to be related to your Yawp. Track these religiously. For instance, save your Internet provider bill. If you buy software or new computer equipment, keep those as well. Driving as part of your Yawp? Record mileage.

3. Take advantage of deductions whenever possible. Your kids may want a new printer—you know you’re going to need one for your Yawp in a couple of months. Put off the purchase until you can make it under the auspices of your business. It can save you money.

4. Keep things organized. The days of business records being kept in a shoebox have gone the way of Nehru jackets and mood rings. Take one hour a week to organize the business side of your Yawp. Put receipts away, file ideas and pay bills. Invest in a good filing system so you can find things quickly. It’ll save time and money.

5. Play to your strengths. If your Yawp becomes a real business, one of the best lessons you can learn is what you’re good at—and what you’re not. Emphasize the former and delegate the latter. For instance, if you’re a great writer but lousy with numbers, write your Yawp and have someone else do your taxes. Spending time on what you do best is the best way to help your Yawp—both as a passion as a business—flourish.

Next Action Item: If you have completed the above Action Items, then you are ready to move on to step 6:

Continue To Step 6: Continue To Learn