How do you start a business?

[IcyBlaze]

I'm thinking of starting a web design business by the end of next year once I have mastered designing in PHP. However, I have absolutely no idea where to start or how to go about doing this. I'm still in high school and I haven't even taken an Economics class yet.

I was wondering if you guys would be able to help me. Basically I need information on how to begin. What do I need to take care of before I start? How would I handle payment? Are there any legal issues I need to take care of?

Thanks for any info you can give me.  

[cidsa]

IcyBlaze

I'm thinking of starting a web design business by the end of next year once I have mastered designing in PHP. However, I have absolutely no idea where to start or how to go about doing this. I'm still in high school and I haven't even taken an Economics class yet.

I was wondering if you guys would be able to help me. Basically I need information on how to begin. What do I need to take care of before I start? How would I handle payment? Are there any legal issues I need to take care of?

Thanks for any info you can give me.

Most people just do this freelance. You decide upon an hourly rate (although some people like to charge per page, word, image, whatever) and then charge them.

I don't know about taxes as it can all be done under the table. If you want to do it properly and pay the taxes, contact the tax agency and talk to them about it.  

[jam-wired]

I'm not sure about the taxes either, as when I've freelanced, I've done very small jobs that I didn't report, but I just thought I'd mention that while it can be done under the table, if you're looking to make the majority of your money this way, build up a portfolio, etc., you will have to invoice most companies. So, unless you're going with smaller companies where people are willing to pay you with cash or with personal checks, it really is something that has to be taxed. That probably wasn't very helpful. :/

Just as a side note, it's very difficult to get clients if you have no work experience. Just something to keep in mind.  

[Chisa]

I'm not sure how it is in other countries, but I was advised to get an ABN (Australian Business Number). That basically means that businesses can handle me as a business, as opposed to putting me on their normal payroll, which most employers don't really like to do for contract work (or so I was told). I don't know if there's an American equivalent...  

[jam-wired]

Chisa

I'm not sure how it is in other countries, but I was advised to get an ABN (Australian Business Number). That basically means that businesses can handle me as a business, as opposed to putting me on their normal payroll, which most employers don't really like to do for contract work (or so I was told). I don't know if there's an American equivalent...

I'm pretty sure there's not. Most of my freelance friends have a client base that is pretty consistent and get new clients through online portfolios. In my job we hire out freelance graphic designers quite a bit when we get too busy (I work in a college's marketing office), and in design firms I've worked with, they'll hire out freelance graphic designers when they get too busy but don't want to hire a full timer.  

[IcyBlaze]

So how do I go about getting paid? Do I just let them pay me actual green bills to my home address?

Also, if I end up not paying tax how much trouble could I get in?  

[Novocain]

firstly, if you're still in highschool and are asking questions like these on Gaia Online (no offense boys and girls) rather than a reputable online Graphic Design resource or finding the answers to them in a physical Graphic Design text (books are so much better than anything a site could offer) you're most likely not ready to begin life as an independant contractor. before considering a business, do some small local jobs (that aren't over the internet) for pocket cash while working a summer job and you won't need to worry about legality until after you've graduated College to start a business.

regardless, here's a summarized explanation of independant contracting. in the United States (no idea about Canada or any other countries) starting a business varies from state to state. most states do not require a Graphic Design lisence (note use of the word most) but many require a DBA (Doing Business As) which is easy to get. This involves going to your county courthouse and (with variation depending on state) making sure you're business name isn't already taken (by doing an internet search and looking through some big a** books), fill out a form and pay a small fee. that's basically it to be considered a business. if you're a business your state may require you to collect sales tax. New Hampshire doesn't have sales tax (which is where i live) so i don't know anything about that.

like i said in a conversation about web design the best way (and i don't give a crap whether other people do it other ways) to charge for your services is at an hourly wage. the only people that should charge on a package basis (ie pay/page with web design, pay/revision with logo design) are design firms. for independant contractors there is no reason to not charge/hour (period, end of story, i'm not listening lalalalalalalala). to do this you meet with your client. they see your portfolio and may ask you to show them some sketch ideas while you're there. they hire you (meaning you are hired and they are obligated to purchase you work once you've begun work after them agreeing to your time proposal). you write up a time proposal of how long it will take you to complete the project, an hourly rate based on your experience/quality of your work/education (as in your degree, not how much you know), and an estimated total fee. included on this form are stipulations about completing the project early, over time, paying promptly, yadda yadda. unless this customer is your 80 year old grandmother who baked you cookies as a child, comforted you after the death of your beloved dog, and nursed you back to health after a terrible run-in with ebola (mother? no. ONLY grandmother age 75 minimum) you will then incur a down payment typically of 50%.

cidsa

I don't know about taxes as it can all be done under the table.

that is completely false. as an independant contractor you need to file taxes. if you don't file taxes, IcyBlaze, you get thrown in jail. that is how much trouble you get into (Al Capone was not convicted for being a huge mob boss, he was convicted for tax evasion). unlike people who work for an employer, independant contractors are their own business entity and are the soul proprietor of tax decuctions from their income (since you don't get a paycheck). this means that instead of filing taxes once a year on April 15th (like everyone else) you need to file them four times a year on Estimated Tax Quarters (April 15, June 15, September 15, and January 15 of the following year). this means you need to have enough self control to set asside enough money for each of these quarters. if you don't, you won't have enough money to pay your taxes when the time comes and will incur a fine, these get bigger as you don't pay, and then you go to jail once the government is tired of fining you. i've been told 30% of every sale you make is a good estimate of what to set asside. you may not end up using it all when the time comes, but at least you won't not have enough.

also keep in mind that as a business you need to factor in cost of office supplies, research, webhost (since the free ones won't let you make profit on their web space), lawyer (who you very well may need), and other business expenses. as a business you need to be very concious of copywrite laws (selling someone else's copywritten photo/illustration/etc puts you in jail) and new technique seminars and software being released.

that's pretty much what you need to do.  

[IcyBlaze]

Thank You very much! That was real informative.  

[Novocain]

IcyBlaze

Thank You very much! That was real informative.

not a problem. lol, unfortunately i didn't summarize as much as i thought i was going to. i have a tendancy of being long winded sweatdrop  

[angelicarson]

If you do it legally you will need to be registered with several agencies. However, I believe you can go to your local chamber of commerce for the details of your city or state.  

[Novocain]

angelicarson

If you do it legally you will need to be registered with several agencies. However, I believe you can go to your local chamber of commerce for the details of your city or state.

if you had read my post you'd notice it said details vary from state to state and you'd be able to find out what exactly those were by going to your county courthouse...  

[Markleaf]

There is actually a book on this very subject titled (naturally enough) "How to Start a Home-based Web Design Business" by Jim Smith (ISBN 0-7627-0561-2;US$ 17.95. It goes into more detail what Novacain mentioned in his post, including resource index, example of a business plan and a contract form. It's very thorough and I find a big help. Can you tell I want to get into this business too? smile Check the book out. It's worth it.  

[Markleaf]

(wince) Sorry, Novocain. I'm a bad speller