Starting a small business

[RiotWyatt]

So I am in the very beginning stages of starting a small business with a friend. It's not anything that I am trying to make a living off of but more of a hobby.

I was wondering if there was anyone here with some experience regarding the startup of a small business, paper work, legal issues, taxes, etc.

We have a recording studio and will be recording cultural traditions and songs for local ethnic groups.

 

[IronShogun.]

I just closed a small business I had with a friend. I never felt he was pulling his weight and never took initiative. I will tell you it severely damaged the friendship.

 

[blokeybloke]

Do you have any Political Reggae songs?

 

[Deleted member 245586]

So I am in the very beginning stages of starting a small business with a friend. It's not anything that I am trying to make a living off of but more of a hobby.

I was wondering if there was anyone here with some experience regarding the startup of a small business, paper work, legal issues, taxes, etc.

We have a recording studio and will be recording cultural traditions and songs for local ethnic groups.

What country and state? Get all the free advice you want and much better answers then what you will find here on Sherdog...

http://www.sba.gov/

 

[RiotWyatt]

I just closed a small business I had with a friend. I never felt he was pulling his weight and never took initiative. I will tell you it severely damaged the friendship.

I understand that. But this studio is something that we have both invested in over several years as a hobby.

He has a degree in audio engineering and a stable job. I work in a completely different field but we are both pretty well off.

The thing is. We will for sure be having some income through it and we wanna make sure it gets done legitimately.

 

[RiotWyatt]

What country and state? Get all the free advice you want and much better answers then what you will find here on Sherdog...

http://www.sba.gov/

Yeah u know about that. And I've consulted others as well. But I was really hoping for personal experiences.

 

[bcordova]

Me and a buddy opened up a boardshop in Central Coast CA when we were 21. We had no idea what we were doing but it survived for maybe 2 years. The most fun/stressful time of my life. It's a lot of work.

 

[IronShogun.]

I understand that. But this studio is something that we have both invested in over several years as a hobby.

He has a degree in audio engineering and a stable job. I work in a completely different field but we are both pretty well off.

The thing is. We will for sure be having some income through it and we wanna make sure it gets done legitimately.

I have a degree in the specific industry as well as years of experience in it, my partner was a in the military police. We had more then enough money for the business. We have been friends since child hood. Everyone warned me saying, "Don't go into business with friends." I shrugged it off...well it did take a toll, how much of toll is really the question. In any event I wish you the best of luck.

 

[LardAss**]

Have a mutually agreed upon plan to cut your losses if you're floating it with working wages.

A lot of small businesses are manifest of someones 'dream' but are otherwise unsuitable on their own. What winds up happening is they become a huge drain on day job cashflow and after the excitement wears off, an enthusiasm gap develops between the partners, one who's sick and tired of supporting it with his wages, the other who's just certain the big break is right around the corner and if they just float it for another (insert time period here), it will catch fire and start carrying it's own load...

Point being, have your sustainability goals very, very clear cut, including exit and/or partnership buyout plans should things get tenuous down the line.

 

[Heisenberg]

I run a small electrical contracting business. In the beginning be prepared to sink most profits right back into the business. For me it was things like ladders, hammer drills, extension cords. The nice thing about it was that it was a write off and basically a one time buy. Once I make that investment I don't have to worry about it for quite some time. Never ever go into a partnership. That shit never works. It wouldn't hurt to get a CPA involved for tax issues depending on the size of your business.

 

[Oeshon]

So I am in the very beginning stages of starting a small business with a friend. It's not anything that I am trying to make a living off of but more of a hobby.

I was wondering if there was anyone here with some experience regarding the startup of a small business, paper work, legal issues, taxes, etc.

We have a recording studio and will be recording cultural traditions and songs for local ethnic groups.

Bad idea in my opinion.

Been there before. Friendship ruined.

Started a business. Once we got successful partner (ex friend) started partying hard and doing fuck all work. Tried to push me out of the business. I took my cash and left. Business died the following year. A lot of lessons learned.

 

[Silmon]

Check out your state's tax department website for stuff you need to file for doing business.

If you're thinking about involving someone else, you need to decide if that person will be co-owner or your employee or your independent contractor. If you're thinking co-owner, you need to think about what type of business entity and you will likely have to file a separate income tax return for fed and state for that business entity. Other posters mentioned potential pitfalls from doing business with friends.

If it's a hobby, don't expect to be able to deduct your expenses in excess over your hobby income. For a business, there has to be a profit intent and you should keep good records of income and expenses.

You also might have self-employment (SE) tax to pay on net SE income and maybe some state sales tax or excise tax.

There are many other issues, so you should go find a good experienced Tax CPA and be willing to pay for advice and tax preparation.

 

[Chest Rockwell]

Never, Ever, ever start a business with a friend unless that friend has all the money, all the resources, and all the work ethic you are lacking. Even then it's going to end bad.

 

[MadSquabbles500]

So I am in the very beginning stages of starting a small business with a friend. It's not anything that I am trying to make a living off of but more of a hobby.

I was wondering if there was anyone here with some experience regarding the startup of a small business, paper work, legal issues, taxes, etc.

We have a recording studio and will be recording cultural traditions and songs for local ethnic groups.

So would you consider yourself a small media production company then? Have either of you worked in the media industry before? Do you have any connections to the local ethnic community centers?

 

[crowded]

Check out your state's tax department website for stuff you need to file for doing business.
If you're thinking about involving someone else, you need to decide if that person will be co-owner or your employee or your independent contractor. If you're thinking co-owner, you need to think about what type of business entity and you will likely have to file a separate income tax return for fed and state for that business entity. Other posters mentioned potential pitfalls from doing business with friends.

If it's a hobby, don't expect to be able to deduct your expenses in excess over your hobby income. For a business, there has to be a profit intent and you should keep good records of income and expenses.

You also might have self-employment (SE) tax to pay on net SE income and maybe some state sales tax or excise tax.

There are many other issues, so you should go find a good experienced Tax CPA and be willing to pay for advice and tax preparation.

This stuff is pretty much the basics. If appropriate you'll want a partnership agreement. Tax ID numbers, bank account, paypal, blah blah.

 

[peytonlucy]

So I am in the very beginning stages of starting a small business with a friend. It's not anything that I am trying to make a living off of but more of a hobby.

I was wondering if there was anyone here with some experience regarding the startup of a small business, paper work, legal issues, taxes, etc.

We have a recording studio and will be recording cultural traditions and songs for local ethnic groups.

List out all of the overhead expenses that do not change based on sales volume. List all expenses that change with sales volume (variable costs.) Start calculating sales volume necessary to breakeven. Realistically assess whether this can happen. then plug in as additional costs what the ownership wants to make. Calculate the new breakeven. Take a good hard look at that breakeven number. Find out what range other businesses like yours do for sales.

Many people calculate breakeven and then project sales based on that. there is no reason to expect any relationship between your actual sales and what you need to breakeven. The world doesn't know your breakeven or even care. If you can't point to solid research on how your sales will reach this number don't start.