setting up a small company -- any tips?

[TooPatient]

DH got laid off in July. The jobs that have been offered have been.... not a good fit.

He started writing a software program the day after his lay off. It is just about done and ready to sell. This particular thing, we are going to list for free to get the company name out there and then offer a different one with lots more features for sale. The plan is to post on the different stores (Google, Android, Microsoft -- adding Apple later) and go from there.

Our tax advisor (20+ years with IRS) is doing all of the corporation paperwork for us. He is very experienced in this sort of thing and also shares his building with an attorney friend who specializes in tax law & small business stuff. Our attorney is also aware of what we're doing and is making sure we don't do anything that could be a problem with his previous employer.

I have already purchased the domain and am in the process of getting the website ready & company e-mail set up. DH is finishing up on the first products and being very active in forums that use this sort of thing.

We don't want to do anything huge. Just the two of us and strictly software (no hardware).

We do have a business name (hence the corporation paperwork), file cabinets, redundant storage for computer information, multiple devices to test the programs on, and the ability to fax/scan/print mass scale if we have to.



I know there are people in the group who have done this sort of thing. Any advice? What did you do wrong? What did you do right? What worked out okay but you wish you'd done differently?
What am I missing? Anything else I should be doing?


Oh --
DH has 40+ years in software development. He has worked on pretty much every operating system out there from the kernel level on up, can comfortably write in almost any language you care to name (C, C++, Java, C#, Lisp, Ruby, Python, Fortran, etc, etc).
He did run his own business (rather successfully) for nearly 10 years but that was awhile ago. Rules & regulations have changed as have the way things are done. (he had his company before any sort of online stores). He asked if I could ask all of you for advice as you've all been so helpful in other areas.



ETA:

Also need:
Corporate bank account.
Business cards.

 

[lyra]

No tips, we live in Canada. My husband lost his corporate job a few years ago, and it has been extremely slim pickings ever since. He set up his own business 2-3 years ago, and is doing contract work. It was a great decision to bridge the gap. It won't be permanent for us, but it was definitely the right thing to do, especially tax-wise. We did the same route basically. We went through a tax advisor for set up and legal work was easily handled. These days, it's good to have a fallback. Our only big issue is that we don't have a great drug plan for ourselves, like we would have with a "regular" job. Those little perks are worth a lot. Maybe not an issue for you.

 

[VRBeauty]

A friend of mine got a lot of help from the Service Corps of Retired Executives (SCORE) when she was thinking of starting a small business. (She decided not to.) You might see if there's a chapter near you.

 

[Karl_K]

If you are working from home and in the US make sure and set aside an area just for the business.
The tax benefits are really nice but they are extremely picky about it being used exclusively for business and it is an audit flag as it is often abused. You have to be able to prove it was used just for the business if audited.

 

[TooPatient]

If you are working from home and in the US make sure and set aside an area just for the business.
The tax benefits are really nice but they are extremely picky about it being used exclusively for business and it is an audit flag as it is often abused. You have to be able to prove it was used just for the business if audited.

Great to know!

How picky are they? If I store some stuff in the room that is not business related (not used in room, just stored and taken out as needed) is that an issue or is that seen as okay?

We are working out of our home. We have an office but do have stuff stored in it right now.

 

[TooPatient]

A friend of mine got a lot of help from the Service Corps of Retired Executives (SCORE) when she was thinking of starting a small business. (She decided not to.) You might see if there's a chapter near you.

Will look into it! Thank you!

 

[TooPatient]

No tips, we live in Canada. My husband lost his corporate job a few years ago, and it has been extremely slim pickings ever since. He set up his own business 2-3 years ago, and is doing contract work. It was a great decision to bridge the gap. It won't be permanent for us, but it was definitely the right thing to do, especially tax-wise. We did the same route basically. We went through a tax advisor for set up and legal work was easily handled. These days, it's good to have a fallback. Our only big issue is that we don't have a great drug plan for ourselves, like we would have with a "regular" job. Those little perks are worth a lot. Maybe not an issue for you.

Sorry to hear your husband lost his job too.

Ideally, we'd have a great insurance plan. That said, what we had before had a deductible that we never met so we had to pay in full for medications anyway.

I hope your husband finds something he loves permanently! Until then, I'm glad he's got something to fill the gap.

 

[Karl_K]

If you are working from home and in the US make sure and set aside an area just for the business.
The tax benefits are really nice but they are extremely picky about it being used exclusively for business and it is an audit flag as it is often abused. You have to be able to prove it was used just for the business if audited.

Great to know!

How picky are they? If I store some stuff in the room that is not business related (not used in room, just stored and taken out as needed) is that an issue or is that seen as okay?

We are working out of our home. We have an office but do have stuff stored in it right now.

You can not claim the area that the stuff is stored if it is not business related.
When you use part of a room you can only claim the part for the business and an argument can be made where the office begins and where the storage ends if you do not have a clear division that you can can show with photographs.
My accountant told me it is best to use an entire room and reserve it exclusively for the business if not a divider should be used to split the room that creates a clear division.
A friend uses office cubical walls from a used office furniture store to split his basement into business and other. They only cost him a couple hundred bucks.
You could use free standing selves with backs to separate it also.

Basically what you need is to clearly show this is my separate and dedicated office and it is used for nothing else.

 

[Rosebloom]

I second the Score recommendation. Also there are so many incubators for new tech companies. Do I remember correctly that you're in the DFW area? If so I might have some specific ideas for you.

 

[iLander]

If you two are working together, make sure that neither of you overlaps into the other's territory. Figure out who does what right up front. Also, neither of you should bring your egos to work with you. DH and I have worked together for many years and if you can follow those two rules, you'll be fine.

 

[TooPatient]

If you two are working together, make sure that neither of you overlaps into the other's territory. Figure out who does what right up front. Also, neither of you should bring your egos to work with you. DH and I have worked together for many years and if you can follow those two rules, you'll be fine.

Awesome advice!

Thankfully, the stuff he is amazing at is the stuff I'm not able to do and the stuff I'm great at is the stuff he doesn't want to do. That will change a bit over time as I am taking classes in programming, but he has different experience than I do and the projects he is interested (and able) to do are likely to remain different from the ones I would be doing.

Will definitely remember this as time goes on!

 

[SMC]

No real tips, but since you have a corporate bank account, you should also get a small biz credit card. My friend started his own small biz, and he said you'd want to keep business and personal finances completely separate so that if anything happens to the business, your own personal property can't be dragged in as assets to pay off debt.

 

[TooPatient]

No real tips, but since you have a corporate bank account, you should also get a small biz credit card. My friend started his own small biz, and he said you'd want to keep business and personal finances completely separate so that if anything happens to the business, your own personal property can't be dragged in as assets to pay off debt.

Thanks!

That is helpful to know!

 

[Karl_K]

This is less a business issue and more a personal one but I felt the need to say it.....

A big problem with both of you working together in the house is separating work from home.
What happens in the office stays in the office and there is office time and home time and they are not the same hours.
Sometimes the best business decision is not the best relationship decision when you disagree.
Keeping a separation is a very hard thing to do but necessary or both the business and your personal life will suffer.
Some couples can not keep that separation and it is best they not work together, if that turns out to be the case recognizing that early and taking action is key. It is not a reflection on your off work relationship if you cant work together. Some people just can't work together yet in a non-work environment they are perfect for each other. The needed dynamics are different.

 

[isaku5]

This is less a business issue and more a personal one but I felt the need to say it.....

A big problem with both of you working together in the house is separating work from home.
What happens in the office stays in the office and there is office time and home time and they are not the same hours.
Sometimes the best business decision is not the best relationship decision when you disagree.
Keeping a separation is a very hard thing to do but necessary or both the business and your personal life will suffer.
Some couples can not keep that separation and it is best they not work together, if that turns out to be the case recognizing that early and taking action is key. It is not a reflection on your off work relationship if you cant work together. Some people just can't work together yet in a non-work environment they are perfect for each other. The needed dynamics are different.

I couldn't improve on Karl's advice, but would like to add that my DH and I could never, and have never, worked together. We have totally different working styles which would be a curse for both of us.

 

[TooPatient]

This is less a business issue and more a personal one but I felt the need to say it.....

A big problem with both of you working together in the house is separating work from home.
What happens in the office stays in the office and there is office time and home time and they are not the same hours.
Sometimes the best business decision is not the best relationship decision when you disagree.
Keeping a separation is a very hard thing to do but necessary or both the business and your personal life will suffer.
Some couples can not keep that separation and it is best they not work together, if that turns out to be the case recognizing that early and taking action is key. It is not a reflection on your off work relationship if you cant work together. Some people just can't work together yet in a non-work environment they are perfect for each other. The needed dynamics are different.

I couldn't improve on Karl's advice, but would like to add that my DH and I could never, and have never, worked together. We have totally different working styles which would be a curse for both of us.

Great reminder!

We've worked together on other sorts of projects before so we know we (usually) work well together but it is a good reminder to step back and set stuff down at the end of work. That can be hard to do sometimes. The biggest thing for us is that we almost always have the same thing in mind but describe it differently so can spend hours explaining why this way is better than that only to find that they were the same thing...

With DH working so much at home for the company that laid him off and me doing schoolwork all day, we've had lots of experience with the problem of no real distinguishing line between "work" and "home". That is hard!
We're still trying to sort it out so we don't lose all of our "home" time to work. It is easy enough to leave the home stuff alone while working but it is so hard going the other way!

 

[TechieTechie]

I had a small business (self guided bike tours) and I concur with the responses on this thread and I will add a few more:

1. Create a business plan. How to market your product, competitor analysis, documentation of your cash flow/P&Ls, the works. Basically your first three year financial projections. Helps keep that 'ooh, I need that' spending urge in check. SCORE should have some good examples.

2. Speaking of spending, I loved using Quickbooks for accounting. Relatively cheap, pretty simple to use, and again, helps keep those financials in check. Be careful not to spend too much at this stage as startup costs are really hard to recoup. Think of all those restaurants that close within the first 3 years

3. Speaking of financials...you can have the best widget in the world, but if your costs are out of line, you will never earn a profit. If neither of you have a background in accounting or finance, suggest boning up on basic accounting:
a. Accounting Made Simple: Accounting Explained in 100 Pages or Less
b. Financial Statements: A Step-by-Step Guide to Understanding and Creating Financial Reports

4. Speaking of the best widget...you need to market, market, market your product. Some Ideas:
a. Create a strong brand ID. If you are visual, start looking at logos that 'speak to you' and get a used copy of Adobe Illustrator and go to town.
b. Try bartering with a graphic designer
c. A lot of business colleges and/or MBA programs need companies who are willing to be subjects for class projects. Volunteer for some free labor (getting interns can be helpful too!).
d. Use of social media, and particularly catchy website design are critical in today's economy. Look for books from Steve Krug and/or Patrick McNeil..good stuff. Personally I loved using Adobe Dreamweaver to create my website...I found it fairly easy to navigate (and lordy, sure it's easier since I used it 15 years ago!).

5. Make sure you have the appropriate umbrella insurance to keep any future claims away from your personal property....

 

[TooPatient]

I had a small business (self guided bike tours) and I concur with the responses on this thread and I will add a few more:

1. Create a business plan. How to market your product, competitor analysis, documentation of your cash flow/P&Ls, the works. Basically your first three year financial projections. Helps keep that 'ooh, I need that' spending urge in check. SCORE should have some good examples.

2. Speaking of spending, I loved using Quickbooks for accounting. Relatively cheap, pretty simple to use, and again, helps keep those financials in check. Be careful not to spend too much at this stage as startup costs are really hard to recoup. Think of all those restaurants that close within the first 3 years

3. Speaking of financials...you can have the best widget in the world, but if your costs are out of line, you will never earn a profit. If neither of you have a background in accounting or finance, suggest boning up on basic accounting:
a. Accounting Made Simple: Accounting Explained in 100 Pages or Less
b. Financial Statements: A Step-by-Step Guide to Understanding and Creating Financial Reports

4. Speaking of the best widget...you need to market, market, market your product. Some Ideas:
a. Create a strong brand ID. If you are visual, start looking at logos that 'speak to you' and get a used copy of Adobe Illustrator and go to town.
b. Try bartering with a graphic designer
c. A lot of business colleges and/or MBA programs need companies who are willing to be subjects for class projects. Volunteer for some free labor (getting interns can be helpful too!).
d. Use of social media, and particularly catchy website design are critical in today's economy. Look for books from Steve Krug and/or Patrick McNeil..good stuff. Personally I loved using Adobe Dreamweaver to create my website...I found it fairly easy to navigate (and lordy, sure it's easier since I used it 15 years ago!).

5. Make sure you have the appropriate umbrella insurance to keep any future claims away from your personal property....

Thanks!

Our tax guy is awesome and more than just a tax guy. He just sent us home with a big packet of information and is sending me all sorts of cool templates and stuff to work with.

I know I'll be coming back to your list again and again as we get going. Thanks for taking the time to list out some of these "little" (but really big) details



ETA: By "more than just a tax guy" I mean that he worked for the IRS for over 20 years so knows all the regulations inside and out. He "retired" to start his own business and has continued to take classes to expand his knowledge in small businesses and more. Certified in more things than I can list.
Oh! And the cool tidbit I learned today is that he volunteers as an auctioneer for a bunch of charities!