First things first, shoutout to all the black business owners, including myself. My entire timeline is filled with black owned clothing lines, digital marketing services, and food services; all deriving from a range of creative passions. Growing up in an entrepreneurial-based household, it is something that I never expected to see as often as I see it occurring now. Being a business owner has its ups and downs, but it's one of the best ways to be creative and learn about yourself and your craft during the process.
Two steps that I have taken to protect my business and give myself some flexibility is to file my business as an LLC and open a business account. There are a bunch of different companies or organizations depending on your filing state that can file the paperwork for you, but I like to be a bit more hands on and understand how to file everything for myself, just in case I need to file for another business or help a future client. Since I live in New York, that is the state that I chose to file my LLC in. The process for the state of New York requires you to have an employer identification number (EIN), assigned by the IRS and to publish your business information in two forms of newspaper advertisements for up to six consecutive weeks within the first 120 days. Sounds super simple, and easily manageable, but guess who hasn't published anything in newspaper ads yet?! I'm working on that!
Next up came opening a business account. If you've followed me for a while, I've started selling products and sending invoices to clients for consulting projects, marketing materials, and web design services. The only bad thing was that all expenses and payments received were going to one of my main bank accounts. It was nice seeing a certain amount being added into my account and retaining a pleasing balance, but I wanted to separate my personal and business expenses from one another, so I can budget and see my profits and losses separately. I found a bank that I was super comfortable with and had great account features for a small business, such as longer bank hours and open on weekends. I feel like this step is super important for any business, because separating your business and personal accounts can help you whenever you need to run a report or calculate your expenses for taxes and future business investments. Also, if I ever have to hire an assistant or partner, I would like to have some type of business account already established to avoid any troubles.
I waited for a while before filing my LLC since I wasn't making a steady profit working for myself, but once I started to pickup more clients and more work, I decided that the pros of an LLC outweighed the cons, and that it was time to file. The biggest advantage, to me, is the limited personal liability. Technically, I am my business, but legally, if anything is to happen, my personal debts and business debts are kept separate from each other. Secondly, when it comes to taxation, or paying the taxes on money that I earn from my business, I will be taxed as a sole proprietorship. In other words, LLCs don't pay taxes, instead my expenses and income tie into my personal income taxes, so I only pay taxes on my profits. The only downside to an LLC is that owners or partners do not get a salary, they pay themselves out of their business account as needed, which is essentially something I was going to do anyway.
So for all of my business owners out there, it's great to make a profit, but also ensure that your assets are protected in every possible way. Don't ever feel bad for seeking help, because you can learn something that allows you to teach others one day. That's what I did, and it worked for me, and I'm glad that I'm able to share my story.
Go be great,