Was one of your New Year’s resolutions for 2020 to take your budding side hustle and pivot it into a full-time job? If you answered “yes” to that question, you’ll need to ensure this thriving side gig is fully in compliance before submitting your two weeks’ notice. From incorporating the business to drafting a business plan, let’s take a look at what a side hustle needs to succeed as a full-time line of work.
Incorporate or form a limited liability company (LLC)
If your side hustle has already incorporated, you may skip this step. However, if you haven’t incorporated yet it’s a good idea to look into entity formations for your side hustle.
Incorporating or forming an LLC provides business owners with liability protection. This creates a separation between personal assets (like houses and cars) and professional assets surrounding the business. In the event of an unforeseen circumstance, such as a lawsuit, your personal belongings would not be impacted due to liability protection. There are also additional perks incorporated side hustles receive as well, including tax benefits and the ability to quickly establish credibility with consumers.
Draft a business plan
A written business plan acts as the foundation for your side hustle. You’re able to watch what happens when the side hustle goes full-time and evaluate the feasibility of the business from an objective standpoint.
It’s not a requirement that every small business has a written business plan. However, it is necessary to have these documents if your company plans to request funding from investors. Interested investors need to know the answers to these questions — which may be outlined in a business plan.
- Who are you? What does your business do? What industry are you in and what are your offerings or services? How does the business make money and why do consumers want what you have to offer?
- What does your competition, both direct and indirect, look like?
- Who makes up your target market and their demographics?
- Who makes up the company? What are their roles and responsibilities?
- What do the startup’s financial projections look like? Can you provide more information about cash flow, profits and losses, and a break-even analysis?
- If you are requesting capital for the business, how much do you need from investors? How will the money be spent?
Obtain any necessary business licenses
What kinds of business licenses do you need to operate a business? This answer tends to vary depending on the industry you’re in and where you’re located.
Check in with the Secretary of State in the state you incorporated and do business in to determine which business licenses you’ll need. In the event that you plan to hire employees, you will need an employer identification number (EIN). This is a nine-digit federal tax ID number that allows businesses to hire, open business bank accounts, and establish a credit profile.
Your side hustle may have a unique name, logo, slogan, or design associated with it, or you may be looking into creating original, new marks once you go into business full-time. It’s important that you protect these marks as soon as possible. The best way to do that is to file a trademark application. This allows you to federally register the mark for your business, ensuring it belongs to you alone and no other outside companies may plagiarize the mark.
Before you file a trademark application, however, it’s a good idea to conduct a trademark name search. Get started with the help of the trademark database available from the United States Patent and Trademark Office. You may quickly find out if your mark is available for registration or if it has already been registered or is pending registration. If the mark is available, great! File a trademark application as soon as possible with your local Secretary of State and pay the filing fee. If the mark isn’t free, keep brainstorming unique marks that differentiate your business. Conduct name searches afterwards. Once you discover the mark is available, you may file to register it.