Why is it so hard to start a business?
If you're planning to avoid trouble and stress, if you want to reduce risks in your life, you should think twice about starting a company.
Starting a traditional company is not for everyone. Because if you want to be successful in your own business, you have to be patient and hard-working. And even after you do everything right, you might not be successful if you didn't see the market conditions clearly or couldn't calculate hidden costs before starting your business.
One of the biggest challenges you have to tackle as a traditional company owner is that when you are your own boss, 'business never sleeps.' Since you have to do everything by yourself, you might feel overwhelmed. So how hard is it to start a business?
If this is your first attempt at starting your own company, you should simply be prepared for what to expect in your first year, as well as the following years.
Of course, starting a company is also rewarding, but you need to be aware of the problems you can face and decide if those risks are worth taking. Remind that starting your traditional company from scratch offers excellent professional satisfaction and also many problems on your professional journey. That's why you must understand your options, such as starting a virtual company. A virtual company enables you to act like a company while saving you from bureaucracy and paperwork regardless of your location. Let's say you want to work with your clients, but you don't want to start a traditional company because of extra costs, paperwork, and unnecessary financial operations. The good news is that you can invoice your clients around the world effortlessly as a solo business owner via your virtual company. To get more information, explore Rimuut or here you can quickly look at the differences between starting a traditional company and a virtual company.
If you are ready to start a traditional company, here are the things you should consider.
Learn more about hidden costs
You have to think carefully and make calculations about the hidden dependencies or costs your company might have in the first year. It is not surprising that many new companies fail in their first year because of unseen, hidden costs.
Ensure you check legislation and rules or understand all costs, marketing requirements, sales channels, and cultural issues. You have to understand your costs clearly, make lists that may be considered as a cost in the future, and if you have a chance, consult a specialist or an experienced friend before starting your company. Most of the time, new business owners assume that the expenses are going down to zero once the company has been created, and they are done paying. That's not the case at all, and it couldn't be further from the truth. Once you have a business idea, you have to ask consider more about hidden costs and ask yourself, ‘should I start my own business?’
For example, you may think insurance is not a considerable cost for you when you first start your company. However, as time passes, you may realize that you may need liability insurance, property insurance, worker's compensation insurance, and small business insurance. That's why it's essential to list and calculate every hidden expense in detail before starting your own company is crucial for business owners.
Another example is that you might need to hire accountants and advisors to regulate your finances, and all of a sudden, you might find yourself having more employees than you have planned.
Lastly, you must consider long term challenges and costs as well as short term ones. For example, if you only think starting a business has hidden costs, you might feel surprised how much it costs you have to pay when closing your company. Depending on the legal structure of your company, you might pay enormous amounts of money.
Choose a legal structure and understand tax laws
Before understanding the tax regulations, you should choose a legal structure that works best for you.
Before making tax-related decisions, you must decide what type of legal structure suits your business needs and expectations. In every legal format, you are obliged to pay an additional tax, and your financial responsibilities will change regarding your choices.
You can choose one of the following; sole proprietorship, partnership, C-corporation, S-corporation, and limited liability company (LLC) when establishing your company. Here are the necessary taxes every business owner has to pay.
Social security and medical taxes
Suppose you haven't decided which structure to choose for your company. In that case, you can get help from a professional to tell you more about the advantages and the disadvantages of each structure and what would be the most beneficial for you.
Another point you should consider before starting a traditional company is learning more about tax deductions. Before considering starting a company, you should determine whether deducting your expenses will significantly benefit you; in other words, you have tremendous costs that are tax-deductible. If you don't think you will hugely benefit from tax deductions, there is no point in dealing with the hassle of starting a traditional company. For example, suppose you are a solopreneur, freelancer, or an ad hoc agency, and you don't have high deductible costs that can lower your organization's tax liability. In that case, you might consider starting a virtual company instead of creating a traditional business. However, if you have many employees on the payroll or other expenses such as transportation, equipment, utilities, office supplies, marketing, advertising costs, repairs, or maintenance costs, starting a traditional company might be the right choice for you. Therefore you can deduct your company's expenses both in the short and long term.
Get ready to handle a lot of paperwork
All businesses and legal entities must be registered in the government system based on their country's regulations. According to the law, you are obliged to register your company if you operate a business that is supplying goods and services.
There is only one exception, if you start an online business and provide digital services for your clients like digital marketing consultancy, graphic design services, you don't have to start a traditional company. You can create a virtual company that can enable you to issue invoices for your clients. If your business doesn't fit this description, you have to set up a traditional company by doing the following steps.
You must choose a company name
You have to name a business address
- You should apply for a tax number
You need to set up a business checking account
So, Is starting a business worth it?
Being your boss and managing your own time will give you the professional independence you need, and the idea of starting your company is worth trying. If you have decided to start a company and be your boss, you can check our previous articles on actionable tips to become your own boss and 5 ways to create your job.
It would be best if you accepted that there are many challenges in starting a business. You must plan your company’s growth in the future; you must ensure that you have enough capital to cover all hidden and unhidden costs. If you cannot take these risks now, we invite you to start your virtual company with Rimuut in a few seconds.
What do you think is starting a business a good idea for you? Leave your comments on Twitter with the #Rimuut hashtag.