Single Mom Start Up Business

The 7-Step Single Mom Start-Up Checklist

Congratulations! You’re starting a business, and I’m here to help you kick things off. Getting started can be especially hard for single moms – we’re chronically short on time, and building a business can take up even more time than caring for your family. But it’s absolutely worth it.

With your own business, you’ll be able to take charge of your financial future, and create a better life – and more opportunities – for your family. It’s also a great way for your kids to learn about responsibility and finances, and gain confidence and competence. By giving them (age-appropriate) jobs, they’ll feel included, and be much more invested in your success – it’ll be their success, too.

Since my son was very young, I’ve been giving him jobs in the family business. Those jobs have changed and grown over the year – he started out “organizing” papers into piles and Swiffering the office, and has turned into a pretty handy research assistant – and they have helped keep us connected. We’re both really proud of his contributions, and he loves getting a paycheck (which, by the way, is a tax-deductible business expense).

On top of my own business, I’ve helped many ambitious entrepreneurs launch theirs. Many have been successful, some have not. But the most successful of the bunch all started the same way…with step 1.

Step 1: Write a business plan.

The vast majority of business start-ups fail, but you can land yours in the success pile by planning ahead. Yes, creating a comprehensive business plan takes time and work, but the benefits to you and your company will far outweigh your efforts. In fact, a well-written business plan can help you secure funding, and set your business on the most profitable path. Your CPA – and if you don’t have one, you really should – can offer immeasurable help with your business plan. The SBA (U.S. Small Business Administration) website contains a wealth of advice on creating your first business plan.

Step 2: Choose and register your business name.

Naming your business is more complicated than ever: It has to be informative, creative, catchy, web-ready, and unique. But the work doesn’t stop once you’ve come up with the perfect name. Now you have to make sure that name isn’t already taken online or offline. If you accidentally step on someone else’s trademark, it can cost you a bundle.

Once you’ve done a thorough search and settled on a name, you’ll need to officially register your company’s DBA (“doing business as”) name, usually with the state government or county clerk’s office. If you decide to use your own name for your business name – super common for freelancers – you don’t have to worry about any of this. But if you do decide to go with a DBA name, click here to learn more about how to make sure you can use it and register it so no one else can.

Step 3: Set your structure.

Every company is built on a legal framework that determines two very important factors: tax treatment and personal liability. You’ll choose the starting structure based on the type of company you’re launching, your personal financial situation, and legal requirements (if any exist in your state).

There are five basic ways to set up your business:

  • Sole proprietorship
  • Partnership
  • LLC (limited liability company)
  • S corporation
  • C (or regular) corporation

The structure you choose determines which forms you’ll need to fill out, what fees you’ll need to pay, if and how the business will pay taxes, and whether your personal assets will be protected from business troubles. Keep in mind, when it comes to your company, the legal structure is not set in stone – as your company grows and changes, you can upgrade your business entity. Click here to get the inside scoop on each type, so you can figure out which is best for your company.

Step 4: Secure financing.

No matter what kind of business you’re starting, you need start-up cash. That money needs to cover your initial set-up expenses, and at least a few months worth of operating expenses – there’s no way of predicting when you’ll be bringing in enough money to cover your company’s costs. But there’s one thing a lot of new business owners overlook: themselves. When you’re trying to figure out how much money you need, remember to include enough to cover your living expenses during the lean start-up phase.

Once you know how much you need, you’ll be able to figure out if you can fund the start-up yourself, or if you need to bring in cash from outside sources. Before you ask for outside funding, you’ll need to decide whether you want to fund your business with debt (a loan that you’ll have to pay back) or equity (selling a piece of the business). From there, you have a lot of options, whichever way you decide to go. The SBA has several different loan programs, all designed to help small businesses get off the ground. They also have a special jam-packed section devoted strictly to women-owned businesses, which offers detailed information about equity funding.

Step 5: Get your business tax IDs.

Every business comes with taxes: income taxes, withholding taxes, employment taxes…the list goes on. And in order to pay those taxes, your business needs its own federal tax ID number called an EIN (Employer Identification Number). If your company is set up as a partnership or corporation, or if you have employees on payroll, your business needs an EIN. On top of that, you may need a state tax ID number, depending on the type of business you run and which states you do business in.

The exception: If you’re a freelancer operating your businesses as a sole proprietorship, you can get away with using your Social Security number if you want to for federal tax purposes. Everyone else, though, click here to see if your company needs an FEIN, and here to apply for it. As for potential state tax obligations, all businesses (including sole proprietors) could be affected. The SBA offers a comprehensive state and local tax requirements guide here.

Step 6: Get business licenses and permits.

State and federal licenses and permits are required for certain businesses – you can’t operate legally without them. On the federal front, you’ll need a federal license or permit if your company is in a federally regulated industry – like selling alcohol. You can find out if your business needs a federal license and how to get it here.

On the state side, the vast majority of businesses require some kind of license or permit, but the rules vary greatly depending on where you are and where you’re doing business. If you’re a professional (CPA, dentist, veterinarian, or cosmetologist, for example), you’ll probably need a license to run your business. If you’re selling products or services to the general public, you may need an operating permit or a sales tax permit. If you’re conducting business in your home, you may need a special permit for that (and you may also need permission from your homeowner’s association if you belong to one). For the skinny on state licenses and permits, click here.

Step 7: Hit the ground running.

You’ve done all the prep, and now you’re ready to get started. Now the hard work really starts – but it will be worth it when your profits start rolling in, bringing you closer to your financial goals.

Ladies, start your companies!