Hey, what’s up, John Sonmez from simpleprogrammer.com.
Today, I’m going to be talking about the fear of starting an online business.
I know a lot of people are afraid to start a business because they’re afraid of all
of the steps that they have to do and things they have to do to get started.
This question comes from Petar.
Petar says, “Do you have some advice on how to get up to speed with legalities in
starting a company without hiring expensive lawyers?
Any resources, blogs, etc.?
Is there really a reason to be as afraid as I am?
How bad can the consequences really be for a small online business if I do some of the
legal stuff wrong?”
He says—I’ll give the additional info.
He says here, “I want to get my entrepreneurial skills a try by starting a company and selling
an online product.
I’m afraid to do this because I know very little about the law, tax regulations and
other such things that are necessary to run a business.
This is especially true because my country has poor online selling opportunities (e.g.
Stripe not available) so I’d have to start a company as a non-resident, either in the
US or somewhere else.”
Of course a caveat expressing I’m not a lawyer, this is not legal advice.
This is just one idiot’s opinion on the internet.
You’re watching a video on YouTube, what do you expect?
No, but I’ll try and give you my best advice here which is essentially this.
More people are afraid to start businesses because they’re afraid of all the legal
and administrative things and what they don’t know so they never start the business or they
spend so much time researching this stuff, or so much money and effort in crossing all
their Ts and dotting all there I’s that they never actually get the business off the
ground and actually make money.
Since most businesses are going to fail anyway and since most people who start businesses
are going to give up before they actually are successful anyway that it’s all kind
of a wasted time.
Based on that, my best advice for you is this: Do the minimal, the minimal that you can do
to get started with the business to be able to allow you to sell something or to make
some money.
Don’t worry so much about the legal implications.
Again, I’m not a lawyer, this is not legal advice.
I don’t live in your country.
I don’t even know what your country is.
I’m at least saying in the US there’s not a lot that—in the US there’s not a
lot that’s bad that can really happen to you.
You could get fined for not having a business license or there are a few things, but for
the most part though, it’s pretty simple.
Here’s the basic stuff I would do from the US.
Again, I can only speak o the US.
I would create an LLC.
That’s easy to do.
You could find out how to do that in whatever state you want to online or you could pay
a lawyer to do that for fairly cheap, but you could file the paperwork yourself.
For example, most of my companies LLCs are in Idaho.
I registered in the State of Idaho, it caused me $100 to file the LLC and 2 pieces of paper
you’d have to fill out and mail in.
I’ve created 12 LLCs in the state of Idaho so that’s pretty simple.
The other thing that I would do is to set up a separate bank account.
Let’s just be smart about this for your business and see if you need—I wouldn’t
even—I mean you can see if you need to get a business license especially if you’re
selling a physical product where you have sales, if you need to collect sales tax, but
for the most part, again, this isn’t exactly my advice to you, but I’m just saying if
you can avoid some of that stuff, you might even avoid creating LLC, you might even avoid
creating the bank account and just see can you actually make some money first, to be
honest, right?
Even that might not even be worth it.
What’s the minimum that you could do to get the idea started, to actually accept the
money, to actually take some money and to see that you’re actually going to follow
through and build this business and that it’s actually generating money.
The reason why I’m saying this is twofold.
Like I said, most businesses are likely going to fail and you’re probably not going to
follow through and you’re probably not going to make money.
I don’t mean to be—and I’m an optimist.
I don’t mean to be pessimistic about it, but let’s just face reality.
If you do have success, you’ll have money.
That’s how you define success in business.
If you have money you can afford to pay a lawyer or an accountant to figure this stuff
out for you.
That’s a good problem to have.
Then it makes sense to invest there, but you don’t want to invest money so you make some
money.
If you’ve only made a small amount of money, you’re not going to get into a big amount
of trouble, in general.
Maybe in your country, I don’t know, I can’t say for sure.
It’s definitely different in different countries.
But at least I know in the US from my limited perspective, not being a lawyer, not giving
legal advice is that I don’t see a lot of trouble you’re going to get into not making
a lot of money.
Once you start to make money then you got to start worrying about these things.
Try to keep it as minimal as possible because money makes a lot of administrative and legal
problems go away in business.
You want to scale up.
As you start to generate some money and you need to keep the finances separate then maybe
you start saying, “Okay, I need an LLC.
I need to separate the bank account.
I need to make this—maybe I need some accounting software.
Maybe I need to start doing quick books or something like that.”
Maybe you start saying, “Okay, well, now I need to start doing payroll” as you start
to make more money.
Maybe I need to start figuring out how to create my LLC as an S corp and file the taxes
for that, and start thinking about those things or create a business credit card and all that.
Maybe I need to figure out what kind of licensing that I need to get.
So don’t do all as much of that stuff as possible as early as possible.
Delay it as much as possible as you can.
At some point, it doesn’t mean “don’t do this.”
Right?
Don’t get me wrong.
Don’t get yourself into trouble and don’t get in trouble for tax evasion and all that
stuff that you can get in big trouble.
That’s usually going to come when you start making large amounts of money.
I would say though that optimize for trying to get the business up and running to use
your energy and motivation for that.
Then once you’re actually making money, now you start thinking about these problems.
Now, you actually have a business on your hand, but you don’t have to worry about
these things and to have a business on your hand because, you know, what if it never succeeds?
What if you just throw away all this money paying for this stuff or investing this time
and energy and – I’ll give you one other piece of advice here, which is you know someone
who is already running a business, especially a similar business to yours.
What might make sense if you think that they’re competent is instead of paying an expensive
lawyer to do all this stuff, go and talk to them.
You’ll see you’re doing a freelancing business and you know someone who is a freelancer.
Well, go and say, “Hey, look.
If I give you a couple hundred bucks or if I buy you lunch, would you mind like going
over like this is what I plan on doing?
Where are the holes in it?
What do I need to do from a legal perspective?
What did you do?
Could you just explain it to me?
I guarantee you.
If you take someone out to a nice lunch, most people will gladly share you that and if not,
a couple hundred bucks is probably going to grease the wheels and then you can feel comfortable.
It’s up to you.
You could do either one of those things and I think you’d be fine.
Great question.
If you’ve got a question for me and it’s not a legal question because I'm not giving
legal advice here, you can email me at john@simpleprogrammer.com and I will give you my layman’s advice on
business.
All right.
How is that?
Anyway, If you like this video, click the Subscribe button and you can get more videos
like this one, and I’ll talk to you next time.
Take care.