Search
Close this search box.

The Brutal Realities of Starting a Business: What Gurus Won't Tell You

One day, I was scrolling through Facebook, and one of my friends shared a post by a young entrepreneur named Nevar (Raven) Terry that resonated with me. She called out business gurus on social media for lying to their audience about spending $200 to start a business, open an LLC, and get a loan. She then went on to list more truths about starting a business, opening an LLC, and maintaining them that gurus do not disclose to their followers. While I already knew some of the points she made were true before opening my LLC, I still feel like I was lured into opening one too soon by these gurus. 

In this article, I will dissect every point Raven made in her post listing the brutal realities of forming an LLC for your business too soon. I will explain why each point is correct and correlate my own experiences with each point. I aim to help beginner entrepreneurs like yourself make better decisions when starting a business. Also, I want to help you avoid making mistakes that other beginner entrepreneurs and I make due to listening to business gurus who push the same failed one-size-fits-all approach to help themselves.

(Disclaimer: this post contains some affiliate links to business services I recommend while explaining some of Raven’s points. This means I will earn a small commission if you choose to buy those services via the links provided at no additional cost to you. Please read my complete Disclaimers about my partnerships.)

Subscribe for Updates

You will receive email notifications on new posts and all other updates.

Entrepreneur Spotlight: Raven Terry

Before I dive into her points, I want to provide some background on Nevar (Raven in reverse) Terry. According to her Facebook profile, Raven is an entrepreneur from Virginia. She has her own crochet clothing business called Magic in Crochet, where she crochets clothing and accessories for women by hand. Follow her company on Instagram: @magicincrochet_!

If you are unfamiliar with crochet, it is a handicraft that involves creating fabrics or textiles by interlocking loops of yarn, thread, or other materials using a crochet hook. It resembles knitting, but only one hook is used instead of two needles. Crochet can be used to create a wide range of items, including clothing, accessories, toys, and home decor.

Raven handmakes and sells a variety of crochet items primarily for women, including:

  • Dresses
  • Swimsuit sets
  • Baby sets
  • Ski masks
  • Head scarfs
  • Skirts
  • Hats
  • Pants
  • Shirts
  • Underwear
  • Cardigans and sweaters
  • Seat covers
  • Stuffed animals
  • More accessories

According to her website, Raven provides other services, including crochet classes, tarot readings, and ready-to-ship and wholesale options. If you are interested in any of these, from her various handmade crochet products to her classes and tarot readings, check out her business. 

Why I Agree and Resonate with Raven’s Facebook Post

Raven’s Facebook post resonated with me because I, unfortunately, fell into the trap of starting an LLC too soon. While my friends were getting caught up in Forex scams, I was caught up in opening an LLC for business ideas that I:

  1. Have not fully solidified as a passion first worked on enough, and
  2. Was not fully educated and relied on untrustworthy sources.

I was hoping that opening an LLC would quickly provide credibility with my audience or potential clients as I continued to work on building everything out. However, I realized this was not a good idea over time. 

This website/blog was already up and running during the height of the COVID-19 pandemic lockdowns. However, it was growing slower than I liked it to. Despite being my fault, I was not writing or creating visual content as much as I am now; I did not see it like that. As a result, I was already looking at other ventures. 

At the time, many of my friends were involved with Forex, sold to the idea that you can get into trading currencies quickly. At the same time, recruiting more people to the popular platform under you will yield even more money. 

My instincts figured that the Forex method my friends were involved with did not seem legitimate, so I stayed away. I wished them the best as they were involved and supported them once they realized it was all a scam. 

However, little did I know I was getting caught up in a scam of my own within the real estate industry. I had always wanted to get into real estate, so I was convinced that assigning home contracts (aka wholesaling) is an easy way to get into it and make a lot of money.

Jurelle Enterprises LLC is Born

After wasting some time and money on courses about wholesaling real estate, I began forming my LLC in May 2020. I always think long-term with everything I set out to do. When I established Jurelle Enterprises LLC, I always believed this would eventually be the parent company for all my business and creative endeavors. However, when I created it, I used it for my failed (at the moment) real estate investing business.

With credibility on my mind, I wanted to ensure everything about Jurelle Enterprises LLC, first as a real estate business and then as a parent company, was set up correctly. I went as far as to consult an attorney to set up everything, including:

  1. Forming the LLC and registering it with the State of New Jersey
  2. Obtaining the EIN
  3. Writing up the LLC’s operating agreement 
  4. Editing the real estate contracts provided to me via my “training” necessary for conducting transactions and assignments.

Once all of this was done, I went even further to build two more websites (while I was still very much building out this one). The first website was my official Jurelle Enterprises LLC, an overview website for my real estate investing business and overall parent company. The second website was exclusively a lead generation website for my real estate investing business. 

Why My Real Estate Business Failed

Unfortunately, after three attempts over two years, my real estate investing business did not work out. I never completed a transaction because:

  1. The real estate market, especially in New Jersey, was not (and still is not) suitable for consistent real estate wholesaling. You may get lucky with one deal, but your next deal may not come for months. Unfortunately, I could not get one. The market was a buyer’s market, meaning there were a lot of buyers but not enough sellers.
  2. What I learned about the wholesaling process did not work for New Jersey’s market, especially during the pandemic.
  3. I could not get a purchase and sale agreement signed by a seller because I was just not convincing enough. Homeowners get annoyed with calls from people, including realtors, asking if they want to sell their house. I struggled with separating myself from that, so I stopped because I felt like I was being intrusive.

I am not skilled at cold calling, so I focused on building my websites with an organic reach marketing strategy. I prefer people find my business and contact me directly to help sell their house quickly. 

Surprisingly, I got some organic leads from homeowners trying to sell their houses quickly. However, I could not help them because:

  1. They owed more on their property than it was worth, requiring a short sale (which was too advanced for me).
  2. They wanted top dollar for their property, which is understandable for the seller but not for my business model.
  3. They were better off renting their property.

This was frustrating because I networked aggressively for end buyers. However, I could never get a property under contract to be assigned to them. With the costs of keeping up my business mounting, I eventually gave up.

A (Almost) Silver Lining, However…

Even though my LLC as a real estate business did not work out, there is a silver lining (or two) to this entire experience. First, my LLC as a parent company is set up in a way that requires little backtracking once I am ready to dive into it again. 

  1. I still own the ‘jurelleenterprises.com’ domain.
  2. The attorney I worked with drafted my operating agreement using generic and broad language. This allows me to operate the LLC virtually any way I want, with little to no changes necessary. However, I have to change any references to ‘real estate’ to a holding company instead since that is what Jurelle Enterprises LLC will ultimately be. 

Speaking of that attorney, while I initially contacted her for real estate needs, her primary focus was entertainment, trademarking, copyright, etc. Some of my goals for Tyler Jurelle, the men’s fashion and lifestyle creator, are to:

  1. Trademark my name
  2. Legally protect myself and my future creative work as best as possible.

I already have an attorney to reach out to for help. All she would have to do is edit the work she has already done for me. This would save me time and money since lawyers charge by the hour. Most importantly, I would be approaching her with a more sound business idea that she is more capable of helping me with since Entertainment and related law is more of her expertise than real estate law.

Just Wait

Despite the positive aspects mentioned earlier regarding the situation, waiting before taking action would have been better. Referring to Raven’s Facebook post, I wish she had made it at least three years ago so that I could have learned the importance of waiting to start an LLC before diving right in. This would have saved me a lot of time and money, which could have been solely focused on achieving the goals of this website/blog. As a result, I would have been in a much better financial and creative position to do what I started in 2020.

Subscribe for Updates

You will receive email notifications on new posts and all other updates.

Dissecting the Facebook Post

From this section to the end of the article, I will dissect Raven’s points in her Facebook post. I will explain why each point she made is right and what I recommend you do instead, where appropriate. Please consider this before starting an LLC for your business before building it to a point where it is worthy of being registered as an LLC.

Raven starts the post by saying, “STOP TELLING PPL TO TAKE $200 and go get an LLC and make them think that’s it so easy they can own a business & go get a loan. IT’S NOT THAT E Z.”   She’s right! Even though I paid an attorney, which costs more money, there are plenty of services that provide business owners the ability to set up an LLC for free. The only thing you, the business owner, would pay for these services are the state filing fees (where the $200 comes into play). 

However, as you continue to read this article, you will learn why you should wait to do this. If your business cannot maintain the LLC, it will cost you more in the long term. Also, you could be asking for unnecessary legal and tax trouble. 

Debunking LLCs Primarily for Business Credit & Loans

I will go into more details about this later, but I want to co-sign Raven’s point about it NOT being easy to own a business and get a loan. Many gurus sell the idea that having an LLC will make it easy to establish business credit and get a loan in your business name instead of your own. This is not as true as they make it seem. Stay tuned to learn why.

Register Your Business

“Once you get an Llc you need to register your business so it’s recognized. (So when you go for loans your business shows legit)”

I’ve alluded to this several times in previous sections, but when you set up an LLC, you must register your business with the state where you plan to operate. Many gurus will tell you to register your business in states like Delaware or Nevada because there are no taxes or fees in these states. While this is true, depending on your business, registering it in another state is not always good practice.

The process of registering your LLC may vary depending on the state’s requirements. Still, generally, you need to fill out and file articles of organization with the state’s business filing office. 

The articles of organization typically include basic information about your LLC, such as its name, address, and members’ names and addresses. You’ll also need to pay a filing fee, which varies by state and can range from a few hundred dollars to over a thousand dollars. Finally, depending on your state, filing fees are required yearly to keep your LLC’s registration active.

Business Address, NOT Home Address

“You need a virtual address or everyone in the world will know your home address when they google it. (Cost money)”

Entrepreneurs often use their home address when they initiate a new business venture. However, this practice is not advisable because every business-related entity you sign up for requires your address. 

When you use your home address for your business, you are disclosing it to various entities such as:

  • government agencies, 
  • banks, 
  • suppliers, and 
  • customers. 

These entities would then have your address on record, which may become available online or in public records. As a result, your privacy becomes compromised, and you may be exposed to unwanted visitors or potential security risks. 

Moreover, it’s essential to remember that using your home address may also impact your business’s professional image. Customers and business partners may perceive your company as less credible if they learn that it is based out of a residential address. 

It’s always better to have a physical address for your business that is separate from your home address to create a more professional image. However, NOT JUST ANY ADDRESS…

Real Office Address instead of a Mailbox at a Mail Center

Most start-up business owners get a P.O. Box at their local post office to use an address that is not a home address. Alternatively, they can go to a mail and packaging center that sells mailboxes. This way, they can use that center’s address, then their mailbox number, as the official address for their business (example: 123 Main Street, #1234, City, State, Zip Code). 

While this can be a good option for new business owners who want to refrain from using their home address, there are limitations. Not all entities listed earlier qualify P.O. Boxes or mail centers as legitimate business addresses. They prefer addresses for actual commercial spaces such as offices or retail storefronts. 

Therefore, you should look for virtual address services that utilize real office spaces with mailboxes for your official business address. They do exist; however, they do cost money.

iPostal1

iPostal1 is an affordable option for a virtual address service that can provide a legitimate address for your business. I used them during the early days of my LLC, and they were great overall. iPostal1 is a virtual mailbox and business address service that allows individuals and businesses to receive their postal mail and packages at a professional address. 

With iPostal1, users can:

  1. View and manage their mail and packages online
  2. forward mail and packages to any address
  3. deposit checks remotely
  4. request scan and shred services for their mail
  5. And more!

iPostal1 offers a range of plans to fit different needs and budgets, with options for personal, business, and virtual office use. Their services are designed to be flexible, convenient, and secure, making it easy for users to access their mail and manage their postal needs from anywhere at any time.

Choose iPostal1 Address Carefully

While iPostal1 is an excellent solution for obtaining a business address, be careful with your chosen address. Each address offered is priced differently according to the type of property that address is. Some cost $9.99, in addition to your plan, while others cost $19.99 and even $39.99. These costs depend on the physical location and its capabilities for fulfilling your business’ mail needs.

From experience, sometimes, the cheaper address options are not always ideal. Since using iPostal1, I’ve had to change my address from a $9.99 option to a $39.99 option because certain entities did not consider them as legitimate business addresses. The $39.99 options are usually actual office locations, such as rentable co-working spaces. Once I made the switch, I had no issues signing up for entities that asked for a business address.

Therefore, if you use iPostal1 for a virtual business address, choose an address that costs $39.99 to avoid issues with address legitimacy as you sign up for critical business-related entities. Yes, this means spending more money. However, iPostal1 and their $39.99 address options, in addition to your monthly, quarterly, or annual plan of choice, are still more affordable than MAJORITY OF their popular alternatives, which charge more money per month or year to use some of the same virtual address locations as iPostal1.

Anytime Mailbox

Another virtual address service you should check out is Anytime Mailbox. Similar to iPostal1, it is an affordable service—maybe even more affordable than iPostal1—for establishing a qualifying address for your business. They have address options all over the United States.

Anytime Mailbox has address locations whose starting prices typically range from $9.99 to $19.99 monthly. More prestigious locations can cost as much as $69.99 per month. The amount of services you will receive, such as the number of incoming mail per month, letter opening and scans, mail forwarding, and more, depends on whether your chosen location offers the service in the first place and the plan tier you choose. 

One great feature of Anytime Mailbox is advertising its virtual address locations based on your business needs. For example, you can filter your address search and subscription plan based on business solutions like:

  • Virtual Business, Office, or Mailing Address
  • LLC Address
  • Physical, Permanent, Business, or Alternate Address
  • *Virtual Mailbox Address for Content Creators*

iPostal1 does not have this level of filtering. This is important to utilize so you can be sure that your chosen virtual business address qualifies as legitimate for important business-related entities that require an official business address.

Business Insurance

“Make sure they know they need business insurance. (Cost money)”

I must admit that I failed to buy business insurance for my LLC when I first set it up. Even though I did not put my business in a situation where I would need it, I still put myself and my LLC at risk. Had something gone wrong with my business, I would have still been screwed, despite having an LLC. 

While an LLC can provide some protection for your personal assets if your business is sued or faces financial difficulties, it alone does not offer complete protection. That’s why it is recommended that you have business insurance in addition to an LLC. 

Business insurance can help protect your business from risks like property damage, lawsuits, and liability claims. It can also provide coverage for things like employee injuries, product liability, and cyberattacks. Business insurance can offer a layer of protection that an LLC alone cannot provide, and it can help ensure that your business can recover from unexpected events.

As Raven said, business insurance does cost money. It is an added expense that you must consider when considering registering your business as an LLC. That is why, if you cannot afford to absorb that cost, continue to operate your business safely as a sole proprietorship.

Separate Your Business from Yourself

“They need to Separate their business so it’s not tied to them.”

Separating your business from yourself involves forming an LLC with your state, using a business address instead of your home address, and buying business insurance. Opening a business bank account is also necessary, but more on that soon. Separating your business from yourself is important because it helps protect you and your personal assets from any legal issues or debts incurred by your business.

When you form a legal entity, such as an LLC, your business becomes a separate legal entity from you, the owner. If your company is sued or incurs debts, your personal assets, such as your house, car, and bank accounts, are protected. 

Additionally, separating your business from yourself can also help with credibility. It shows potential clients or customers that you are serious about your company and have taken the necessary steps to protect and operate it legally.

As mentioned, being able to legally and financially separate your business from yourself does cost money to implement and maintain. That is why it is only necessary once your business grows to a point where it does. Trust me, as a business owner, you will know when it is the right time to begin separating your personal life and assets from your business.

Business Taxes

“TAXES TAXES TAXES… know that it COST MONEY to OWN an Llc and you have to PAY!!!!! (Cost money)”

It is crucial to understand that owning an LLC involves more than a one-time cost. To keep your LLC in good standing, you must pay fees yearly. These fees vary depending on the state where your LLC is registered. For instance, in some states, the annual LLC fee might be a flat rate, while in others, it might be based on your LLC’s income or number of members.

In addition to the annual LLC fees, you must also file business taxes every year. This involves reporting your LLC’s income and expenses to the Internal Revenue Service (IRS) and paying taxes on profits. 

It is important to note that LLCs are pass-through entities when registered as a single-owner (sole-proprietorship). This means that the business itself does not pay taxes. Instead, the gains and losses are reported on the personal tax returns of the LLC’s owner(s). 

Overall, keeping up with the annual fees and taxes associated with owning an LLC is essential to avoid penalties or even having your business dissolved by the state.

Business Taxes Despite No Income

“OH AND IF YOU THINK just because you ain’t make no money in your business that you don’t STILL HAVE TO FILE …. YA WRONG!! They will penalize you. (Cost money)”

Once again, Raven is correct here! Just because you made no money in your LLC does not mean you do not have to file taxes. You still do; you will have to report a loss. An LLC is considered a separate legal entity from its owners, which means it must report taxes on any income it earns or losses it incurs.

It is important to note that failing to file taxes for your LLC can result in severe consequences, including penalties, interest, and legal action. Therefore, it is strongly recommended that you work with a qualified tax professional who can help you navigate the complex tax laws and ensure that your LLC complies with all tax requirements. Tax professionals, obviously, cost money. So, make sure you’re prepared to incur this cost before even setting up your business as an LLC.

Dissolving LLCs

“IF YOU THINK YOU CAN just let an Llc sit without DISSOLVING IT …. You will be sick when you see the FEES that come with a dormant Llc.”\

I wish I had known this sooner because I am suffering the consequences as we speak. By 2022, I decided to leave my LLC alone until I could craft a better plan for it. However, I plan on reinstating this year and was shocked to see how much I must pay. I have to pay for three years (including this year) in backed annual report fees, in addition to late fees. 

If I were to reopen my LLC today, I would have to pay over $300. While that is not bad, it could be worse if my LLC were registered in another state. Also, this could have been avoidable if I had paid the $75 Annual Report fee yearly. If you form an LLC too soon and do not keep up with annual reports and fees, you could suffer the same fate as me, if not worse.

If you no longer wish to maintain an LLC, you must adequately dissolve it to avoid late and penalty fees. To dissolve an LLC, you must file articles of dissolution with the state’s Secretary of State office. This ensures the LLC is officially dissolved and no longer subject to annual report fees or other requirements. 

If you’re like me and want to keep your business open but do not plan on actively doing business, you should file for a status change with your state’s Secretary of State office. This status change can allow the LLC to remain open but with a different status, such as “inactive” or “dormant.” This status change can help you avoid annual report fees and other requirements while keeping your LLC open. Lesson learned!

Truth About Business Loans & Credit

“You can’t just get a business loan immediately you need NET 30’s 60’s or 90’s that take 30 60 or 90 days or you need IMMACULATE PERSONAL CREDIT because there’s no business credit established on your EIN.”

Being able to easily obtain business loans and credit with my LLC is a familiar lie business gurus also tell. Is securing credit for your business an excellent way to separate business purchases from personal ones while decreasing personal liability? Yes, it is! 

HOWEVER, is it as easy as business gurus make it seem? ABSOLUTELY NOT! In fact, I will not be surprised if those gurus bragging on social media about how they bought a car or vacation with business credit did something wrong or even illegal that could come back to haunt them soon, if not already.

Building business credit takes time and, most importantly, money. Having an EIN and a Dun & Bradstreet number is only step one. You will either have to earn revenue for your business or keep allocating personal money toward building your business’s credit. No lender, business credit card company, or tradeline will give your business any credit without you providing some money or proof of consistent revenue.

While some companies make it easy to open NET 30, 60, or 90 accounts with them, you will still have to pay back what you purchased from them within 30, 60, or 90 days. Again, that money must come from actual business revenue or out of your own pockets. Other creditors will not even take you seriously without: 

  • being in business for a certain period of time, 
  • proof of consistent income, and 
  • great personal credit (sorry, sometimes you can’t escape your personal credit report).

Nav

There is only ONE online service I know and trust that allows new business owners with little to no income to build business credit. The service is called Nav, specifically their Nav Prime feature. Nav is a marketplace of various resources for small businesses. Their platform is designed to give small businesses an overall picture of where they stand, mainly regarding financial health. 

The Nav Prime feature is just a rebrand of the business credit-building service that initially attracted me to Nav. For $49.99 per month, Nav reports payments to business credit bureaus to help establish a payment history. The goal is to help build a business credit score and qualify for better business funding. 

With Nav Prime, as it is set up today, for the same $49.99 per month price, you will get two tradelines. The first tradeline will be the original business credit-building service mentioned earlier. However, Nav’s new Prime Card and repayments are the second tradeline. The Nav Prime Card is a business charge card that helps build business credit as you use it. 

Combine Nav Prime with their business checking account (more on this later), and now you have an all-in-one solution to help you become more prepared to apply and get approved for business funding. 

But Be Careful…  

As tempting as this may sound, remember what I wrote earlier: building business credit takes time and money. It will take at least three months to improve your business credit with Nav. That is $150, which you must be prepared to pay. Also, even if you get a credit line for the Nav Prime card, where will you get the money to keep up with the card? Especially if your business needs to generate more income on its own, if at all.

Understand that it is not a good idea to treat business credit like you (and I) are already treating your (our) personal credit. Bad business credit is not a good look for lenders and certain other entities. 

That is why if you sign up for Nav Prime, you only pay $49.99 for the payment history tradeline. Only use the Nav Prime card if you and your business are in an excellent financial position to take on the risk. 

Still, open a business bank account, but use that for your business income and business-related purchases. Once you consistently earn enough business income, you can use the Nav Prime Card. It will be one of, if not the easiest, business credit card you will ever get.

Subscribe for Updates

You will receive email notifications on new posts and all other updates.

Accounting Software

“You need BOOKS like QUICKBOOKS so you can SHOW PROOF of expenses to avoid taxes etc.”

I should have known I was not ready to run an honest business when I failed to use QuickBooks to keep track of my expenses. I had an account linked to all my (personal) bank accounts, but I was too lazy to indicate which transaction was a business transaction. 

However, what did not make sense was I ended up keeping track of my business expenses manually. I’m talking about saving PDFs of my receipts and logging them into Excel, things Quickbooks would have done for me. I know, I’m an idiot.

The moral of the story is that you need accounting software like Quickbooks or Xero to keep track of your business-related expenses. This way, when you file your business taxes, you can deduct those expenses and lower your tax payment (or potentially increase your refund check). Quickbooks help ensure all your business expenses to deduct are organized and separated from your personal purchases. 

Separate Personal and Business Purchases

“YOU CAN NOT MAKE PERSONAL PURCHASES off your business accounts unless you can prove it was for business.”

This is a vital tip I wish I had learned sooner. Try your best to keep your personal and business purchases separate. Ideally, use a separate business bank account for all business-related purchases, even if you deposit your money into it regularly until your business starts earning revenue. 

Once you have a business bank account that receives enough consistent revenue, use that revenue only for business-related purchases. Do not treat your business bank account as another personal bank account. 

Using a separate business bank account only for business-related purchases helps organize expenses for taxes more effortlessly. If a personal purchase is included, you must prove it was for business. Otherwise, you could get in trouble. Also, it’s simply poor money management. 

Payroll and Taxes

“THEY NEED TO pay themselves and pay more taxes and the payroll company also (Cost money)”

When turning your hobby into a small business, it’s essential to recognize that not all revenue is take-home pay. You will have to get into the habit of taking a portion of your earnings for yourself and keeping the rest for expenses. The money you keep for yourself is considered your salary or wage earnings. You will need to be prepared to pay taxes on that money.

I do not recommend you do all of this manually. Instead, use a payroll company or service and your accounting software to handle all of this. The online payroll service (I recommend Gusto) will keep track of the money you hold as earnings and the taxes you will pay as a result.

Although Quickbook’s essential services may be free, the payroll company or service you choose to use will not. This is another reason not to listen to gurus and wait to establish a registered business.

Business Bank Account

“They need a bank account, They need money to start the account. (Cost money)”

I agree with Raven that you will need a business bank account. However, I can’t entirely agree with the notion that you need money to start the account. There are a growing number of online services that provide free business bank accounts with no minimum deposit or balance requirements, such as:

Either way, you will need a business bank account to:

  1. Obtain business funding
  2. Keep your business revenue and expenses separated from personal
  3. Comply with other business services that may require one

As mentioned earlier, I recommend Nav for opening a business checking account because it is free and works well with the Nav Prime business credit-building feature. I also recommend a Quickbooks business checking account. Not only is it free, but it is also good if you prefer an account that works well with the same service that organizes your expenses. 

Finally, PayPal also makes it easy to open a business checking account. However, PayPal is known for its too many transaction fees. Their business checking accounts are not immune from those fees. The convenience of quickly opening an account is not worth the fees.

Build a Website

“They need a WEBSITE (Cost money) or INVOICES to show where this BUSINESS REVENUE is streaming from or the little IRS is going to chew you up and spit you out.”

Building a website for my brand is one of the few best things I’ve done for my business endeavors. It is the primary way I earn revenue and helps build credibility. Honestly, had I solely focused on growing and improving this website instead of jumping into starting an LLC, I believe I would be much further along in all my endeavors.

If you plan to turn your business idea or hobby into a full-fledged business, there may be other priorities than having a website. This is especially true if you do not have the funds to hire a web designer or lack the time, skills, or patience to build a website on your own.

As long as you can show proof of your business revenue that can be adequately reported, you and your business will be in good standing with the IRS, potential lenders, and other entities requiring visual proof of a legitimate business. Either way, you will need at least one of these: a website or straight-up revenue. 

If you want to build a website yourself, check out my Web Development blog section. There, you will find all of my articles written to help you create the best website for your business.

Read More: ChemiCloud Review: The Best Web Hosting for Entrepreneurs >>>

Set Aside Earnings for Taxes

“THEY NEED to be putting 20-30% of their earnings to the side for TAXES (yeh cash on the side sounds so much better now huh)”

I mentioned this a few times already in this article. If you establish an official business via an LLC, you must set aside some of your earnings for taxes. To best do this, your earnings should:

  1. Be deposited in a separate business checking account
  2. Be tracked and managed via accounting and payroll software. The payroll software will then be able to automatically calculate and even deduct the right amount of taxes for you.

I have already provided free business checking accounts and accounting software options. However, you must pay for payroll software to help set aside taxes. If you cannot afford this, you should continue operating your startup business idea as a sole-proprietorship side hustle that earns you extra cash. 

Maintain a Balance in a Business Bank Account

“THEY NEED TO SHOW A MAINTAINED BALANCE or a regular DEPOSIT/PURCHASES for a BANK TO even consider lending against an EIN….”

It’s essential to have a business bank account, especially if you are seeking a business loan. To be approved for a loan, you need to show that your business bank account has regular transaction activity, including deposits, purchases, and maintaining a balance.

Suppose you’re still in the early stages of your business. In that case, it’s wise to open a free business checking account and use it regularly to deposit your business income and make business-related purchases. This will demonstrate business maturity, which lenders often require. 

It’s advisable to wait before setting up your LLC, but you can still have an active business bank account. This way, when you’re ready to establish your LLC, you can apply for funding immediately since your business bank account will have been active for longer. The bank account with recorded deposits and purchases can serve as proof of business legitimacy and length of time in operation, which will be more extended than the LLC itself.

Finally, having an extensive record of your business deposits will give a positive impression to lenders. They will see that your business has been making money, even in its early stages. As a result, lenders will feel more confident that your company can repay them on time.

Subscribe for Updates

You will receive email notifications on new posts and all other updates.

Final Thoughts

Owning your own business can be an enriching experience. However, it is more challenging than gurus make it seem, especially in the early stages. Had I known this three years ago, I would be much further along in my business endeavors. However, I am still playing catch-up and recovering from the consequences of starting an officially registered business too soon.

I wish Raven had written her Facebook post that went viral three years ago because she would have saved me from a lot of trouble. Either way, I am grateful her post confirmed many of the lessons I learned on my own over the years. At the same time, her post helped prevent more aspiring entrepreneurs from making these mistakes.

I hope this post expanding on Raven’s tips will help amplify them because she is right. These business gurus spend a lot of time and money selling one-size-fits-all approaches to starting a business that does not work, either as promoted by these gurus or at all. There are plenty of brutal realities of starting a business that these gurus won’t tell you because they cannot profit from those realities. However, you are at a disadvantage because you are spending time and money seeking information that just is not true.

Suppose you are a small business owner being bombarded by advertisements and social media posts from business gurus. In that case, I hope this post is a valuable read before you listen to them. Please comment below this post or message me with any questions or concerns. I will get back to you as soon as I can.

Subscribe for Updates

You will receive email notifications on new posts and all other updates.

This post was originally published on: 04/29/2024

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Posts:

You cannot copy content of this page

Subscribe for Updates

By subscribing to my website, you will receive email notifications on:

  • Announcements, updates, and events.
  • Newly published blog and portfolio content.
  • Exclusive promotions and discounts from brands I am affiliated with.