I never imagined myself being in business.  It never occurred to me.  Back in the mid-90s, I had the opportunity to leave my career as a public relations and marketing director/spokesperson for a hospital.  I had been a single mom for eight years and this job had given me experience, a good salary and health benefits.  I had dreams of playing a bigger game yet I didn’t exactly know how it would look.  I knew that I was going somewhere that would be outside of my small community and into the world.

I gave myself six months before I left my job to set myself up in a 400-square-foot studio we had next to our home.  I fixed it up, bought a desk and set up my computer in the classic “if you build it, they will come.”

I put the word out to my network that I was interested in freelance work.  I started working with a few ad agencies and doing project work with their technology clients.

After the first few months as a freelancer, I wanted to set myself up for success as a “real business.” The first step I took was to go to a reputable accountant.  I chose the accounting firm my husband’s physician group had used for years.  I told the accountant that I wanted to start a business and asked what was the best legal structure for me given that my husband had a private corporation (PC).  I won’t get too detailed here but he discouraged me from starting a business because I would have to pay all of my social security, taxes and the highest tax rates for federal and state taxes, 39 percent.  This was more than 50 percent of my gross revenue.  That meant I took home half of what I earned.  I decided he was not the accountant for me and went to the only female in the firm.

After that meeting, I followed her advice to form an S Corporation.  By the way, she is still my accountant today and has done a tremendous job helping me navigate both businesses.  I phased out of Extraordinary Work Group, healthcare technology PR, in late 2009 and began coaching and consulting.  I have reverted back to using Sherold Barr Consulting on my business checking and financial materials.  I use my name as my domain name because that will not change but my business focus might.  I regularly recommend that my client’s use their name as their business name or associate it with your main service.  Today if I were starting a business, I might use an LLC as my business structure.  At the time, it was necessary because there was already a PC – private corporation – in the family.

Next, I went online to the State of Oregon Corporate Division and filed for an “Assumed Business Name.”   You need to do a name search to make sure no one else has the business name you want to use.  Each state has a corporate division that offers a name search as part of the process.

My next task was to find an attorney to set up my S Corporation.  There are many ways to start a corporation.  You can be a sole proprietor, LLC, PC or S Corporation.  I recommend that you go to LegalZoom and read about it and ask your accountant for advice.  This link compares the different business structures.

Initially I filed it as Sherold Barr Consulting Inc.  Later when I began subcontracting with Microsoft’s PR firm, I created a dba, which stands for “doing business as.” On tax materials it read Sherold Barr Consulting, Inc., dba Extraordinary Work Group.

The next thing I did was to set up a business checking account in the name of my business.  I recommend setting up a business savings account.  Even if you put in $100 or less a month, you are saving money.

For two and a half years, I was a freelancer.  The money I made I put back into my business to pay expenses.  Though I did not take a salary,  I would recommend that you take a draw even if it is small.  It’s important to get into the habit of paying yourself first.  This will show the Universe that you are serious and it will match your efforts.

Recently I heard these terms being used in terms of types of business owners — a “Ho” versus a “Bo”.  A “Ho” in this article is a hobbyist.  A “Bo” is a business owner.  When you take these steps I recommend, you are a Bo.  The Universe will match your efforts and intention as you commit and do whatever it takes to make your business a success.  So what are you gonna be – a Ho or a Bo?

Seven Steps to Set Up Your Business

1.  Hire an attorney or use Legal Zoom to research the best corporate structure for your business.  Check out LegalZoom.

2.  Hire a good accountant and/or bookkeeper.  I use both.  My bookkeeper does my quarterly tax prep for me, and we use Quickbooks Pro.   My accountant does my end of the year tax preparation.  I call her from time to time during the year if I have a question about a deduction or anything related to my business taxes.

3.  File your business name with the state where you live.  Search for your state Corporate Division.  You will find all the information there to search to make sure that no one already has your business name.  Here’s Oregon’s Corporate Division as a sample.

4. Buy your business domain name.  I recommend that regardless of what you name your business that you buy your domain with Godaddy or Bluehost and that you own your own name.  You don’t need to pay more than $12 for your name.  There is more to this but for now just own your name.  If you have a common name, add your initial.

5. Set up a business checking and savings account.  Go to your bank and set up a separate checking account and savings account for your business.  You want to keep your personal and business finances completely separate.

6.  Keep receipts of all business expenses.  I set up files for my tax receipts.  I have an accordian file with these categories on tabs and file my receipts monthly in these areas: accounting; bank statements; contract services (web designers or any contractors you hire); credit cards; dues and subscriptions; furniture, equipment & repairs; insurance; Internet; meals & entertainment; postage; professional development (courses, books, trainings); supplies;  taxes; telephone; and travel.  You want to keep receipts in case your business is audited.  I was updating my files recently and noticed that in 2004 I was audited by the State of Oregon to make sure that all the contractors I hired were legitimate and they paid taxes.  It cost me $400 for my accountant to handle this and go through my taxes.

7.  Put aside money for taxes.  Your accountant or bookkeeper will tell you how much money you will need to pay in quarterly taxes based on your income bracket.  I recommend that each time you get paid, you put money in your savings account for taxes so you are not shocked when you tax bill arrives.

Disclaimer:  This is how I set up my business back in 1995.  There are different ways to do this today and each country has it’s own tax rules.  I ask you to use what I have outlined only as a guide.  Please get advice from your accountant, bookkeeper or attorney.