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In this article:\nSole proprietorship vs. incorporation\nTypes of incorporations\nHow to incorporate your small business\nWhen you first start your business, a sole proprietorship makes sense, especially if you are your only employee. But at what point should you take the next step to incorporate your business?\n \nAs your business starts to grow, there are several advantages that incorporating can offer you. There’s definitely a lot to think about as you’re considering taking that next step with your business, so we’ve provided a great starting point for your research with this article. \nSole proprietorship vs. corporation\nFirst, let’s define sole proprietorship versus corporation. \nA sole proprietorship is a business that is owned and run by one person. In this type of enterprise, the business and the owner have no legal distinction and are essentially the same entity. \nAn incorporated business (a corporation) is a company that is formally recognized as a separate entity in the eyes of the law. Once incorporated, the business is its own legal structure separate from the individual/s who started it.\nAdvantages of a sole proprietorship\nAs you are starting your business, keeping it simple as a sole proprietorship can make a lot of sense. Some of the advantages of this include:\nYou don’t have to file separate business taxes\nYou have less paperwork because you aren’t required to separate financial statements for your business and yourself\nYou get to keep all of your profits because you are the sole owner\nAdvantages of incorporating your small business\nWhen you decide to incorporate your business, you are turning it into a legally separate entity. The business and the owner are no longer one and the same. \nBecause of this, some things may become a little more complicated, like taxes and financial records. But it provides several advantages that being a sole proprietor doesn’t offer. \nYou can protect your personal assets from lawsuits and bankruptcies because your business and you are separate entities\nEstablishing your business as a corporation gives your business more credibility with customers, vendors, and employees\nAn incorporated business has the potential for better longevity. If you pass away as a sole proprietor, the business goes away with you, but an incorporated business can be passed along to another owner and the business can continue\nBetter chance of securing a business loan \nTypes of corporations\nAs you are considering incorporating your business, it’s important to learn the types of corporations, the advantages of each, and the purposes they serve. \nIn simple terms, the main differences between each type of corporation are the ways that taxes are handled.\nfile tabs with LLC S corp C corp for how to incorporate small business\n\nLLC\nLLC is a \nlimited liability company. \nLimited liability means that the owners of the company are not personally responsible for any debts or lawsuits that the business may incur. LLC members (another term for the owners) don’t have to put their personal assets on the line to cover lawsuit settlements. \nThat being said, there are some similarities between an LLC and a sole proprietorship to keep in mind. An LLC is kind of a stage in between a sole proprietorship and a full corporation. It combines some elements of both types of business structures.\nTaxes are one such thing in an LLC that are more similar to the structure of a sole proprietorship. The LLC doesn’t pay its own income taxes; the owners list their business profits and losses on their personal tax returns. \nWith an LLC, you can choose to tax your business as a corporation, but there are some additional tax laws and filing requirements to consider (learn more under the S corporation section below). \nThere are some distinct differences between an LLC and a corporation that you should consider before deciding which direction to take:\nIt only takes one business owner to form an LLC; you don’t need to have multiple members to get started\nIf you run a business in the banking, trust, or insurance industry, you can’t form an LLC\nSome states prohibit additional types of businesses from forming an LLC, so learn what your state requirements are before pursuing this option\nC corporation\nA C corporation is owned by shareholders of the company and, as such, its profits are taxed differently from any other type of corporation. A C corporation is required to elect a board of directors to oversee policies and make business decisions for the company.\nMajor advantages that a C corporation has over other types of corporations:\nC corporations usually have a lower risk of being audited\nYou can deduct the cost of benefits as a business expense (for example, you can write off the costs of health plans for your employees)\nThe corporation’s profits are taxed, and then the profits can be split among the owners (usually saving money on taxes for the individual owners)\nC corporations can have an unlimited number of stockholders\nForeign nationals can invest in C corporations\nS corporation\nAn S corporation is not a type of business entity like an LLC or C corp. Rather, it is a way to designate how your business will be handling its taxes. The IRS only classifies businesses as one of the following when it comes to taxes:\nSole proprietorship\nPartnership\nC corporation\nS corporation\n“LLC” is not an option when determining how to handle your business taxes because in an LLC you have to choose whether to file taxes as a sole proprietorship, partnership, or corporation. \nThat’s where S corporation comes in. This is the designation you can choose on your taxes for your LLC business if you want to be taxed as a corporation. \nThe main difference between taxing your business as a sole proprietor and an S corp is the way Medicare and Social Security taxes are handled. Sometimes, LLC owners can save money here by choosing to file as an S corp. \nAdvantages to taxing your business as an S corp:\nThe owner reports an individual salary which counts as an expense for the business on tax returns\nMedicare and social security taxes are only paid from each individual’s salary, not all business profits\nincome tax documents return for S corp for how to incorporate small business\n\nHow to incorporate your small business\nYou might already have a pretty good idea of which type of corporation will work best for your business. But no matter which way you choose to file, the following steps are important as you start the process of incorporating your business. \nConsult an attorney\nFirst, find a good attorney. Unless you are an expert business lawyer yourself, it’s likely that you’ll miss some things along the way, so protect yourself by consulting an attorney to help you hit all the right steps. \nAn attorney will be familiar with compliance, local licensing and zoning laws, and the proper paperwork for filing your incorporation. \nDetermine which type of corporation is right for you\nDo your research on the purposes and advantages of each type of corporation. Which is the best for your business?\nAre you a solo business owner and just want to keep your business and personal assets separate? Then an LLC could be a good route for you to take to protect yourself as an individual from any lawsuits that may come up related to your business. \nOr, maybe you have multiple owners, several employees, and/or a number of people interested in becoming shareholders. Then a C corporation might make more sense for you. \nTalk to your attorney about the tax implications of each type of corporation that you are considering and use that to help you decide which way to file your business. \nFind a business name\nWhen you file your business as a corporation, you need to have a unique business name. You won’t be allowed to choose a name that is already in use in your area because that will confuse consumers.\nSo, come up with several different options for a business name. Most secretary of state offices even have an online business name search where you can see which names are already registered. Use these resources to help you come up with something unique. \nName a registered agent\nA registered agent is someone that can accept mail on behalf of your company. When your business becomes a corporation, you are required to have a registered agent. This can be the owner of the company, your business attorney, or another director or employee within your company so long as they reside in the same state as your business. \nThere are even online services that you can pay to act as your registered agent. \nWrite articles of incorporation\nEvery corporation has to write their “articles of incorporation.” This is typically a one to two-page document that includes the following information:\nExplanation of your corporation’s purpose\nYour business’s name and address\nNames and addresses of each member of your board of directors\nNames and addresses of each officer of the corporation\nThe duration of your corporation (usually forever)\nYour attorney should be familiar with this process and can help you draft up your articles of incorporation. There are also online legal sites that offer assistance with this for a small fee. \nFile articles of incorporation with your state\nOnce you have your articles of incorporation written, you need to file them with your state. There is a fee associated with this—usually anywhere between $100 and $500 depending on your state—so be prepared for that. \nThis document should be filed with your secretary of state, and you can usually do this through their website. Find your secretary of state’s website and follow their instructions for filling your articles of incorporation. \nObtain business permits and licenses\nAfter your business is registered with the state, you need to obtain any and all business licenses and permits that are required for your particular business type (if you don’t already have these). Your attorney can help you determine what you need here. \nOpen a bank account for your business\nNow that your business is a separate entity for you as an individual, you need to open a separate business bank account. This will help you keep accurate records of your business’s finances. \nAll of the steps leading up to this point should be sufficient for an LLC. If you are choosing to establish a C corporation, continue with the next three steps. \nWrite your corporate bylaws\nCorporate bylaws lay out how your corporation is to be structured. They should have information about your shares, voting rights, how to replace board members, and other such details. \nTypes of information that you might include in your bylaws:\nTypes of shares that can be issued by the corporation\nInformation about shareholder and board meetings\nHow loans, contracts, and other transactions will be approved by the corporation\nProcedures for financial audits and how often they should occur\nInformation about the fiscal year\nProcedures for amending corporate bylaws\nYour corporate bylaws help keep structure within the business and are typically much more detailed than your articles of incorporation. These will help board members and shareholders stay accountable to the business. \nKeep a book of corporate records\nAs you incorporate your business, you should start keeping a “book” of corporate records. This is a record of all relevant documents for your corporation. This doesn’t need to be a physical book, but can (and probably should) be kept in your digital records for ease of access. \nItems to keep in your corporate records:\nArticles of incorporation\nCorporate bylaws\nMinutes of shareholder and board meetings\nAll stock transactions\nAnnual reports\nBusiness loan documents\nAny contracts the business enters into\nCommercial real estate transactions\nHold a board meeting\nOnce you have all of your records in place and have registered your corporation with your state, you are almost there! The last step is to hold your first board meeting to make everything official. \nAgenda for this first board meeting should include the following:\nBoard member formally adopt the bylaws and articles of incorporation\nA corporate seal is decided on\nIssue shares of stocks to initial shareholders\nElect your CEO, CFO, and other officers\nKeep a record of the minutes of this board meeting and all future board meetings. \nComplete any other state and federal requirements\nNo matter which type of corporation you are filing as, be sure you complete all state and federal requirements that apply to your business. Discuss these with your attorney. \nOnce this is done, your business is officially incorporated! This whole process can be completed within weeks if you enlist the right attorney and do your initial research to understand how everything works. 

How and when to incorporate your small business

In this article:\nFree local advertising ideas for your salon\nClaim your online listings\nCustomer reviews\nSocial media\nWebinars and videos\nShare your knowledge\nAnd much more!\nEvery business needs advertising in order to gain new customers and increase profits. But it isn’t always an easy or inexpensive task to take on. \nWe know how important marketing and advertising is, and we want to help you get started. So, we’ve come up with a list of several free and effective ways that you can advertise your hair or nail salon.\n1. Create and claim your online directory profiles\nTo improve your online visibility and take advantage of the power of online reviews, you first need to create and claim your online directory profiles on Google, Bing, Yelp, and so many others.\nAdding your salon to these directories not only helps you get found by customers who are searching those directories, but it also helps the search engines to verify that your information is accurate across multiple trusted sources.  \nCheck out these tutorials to get started:\nHow to claim your Google My Business listing\nHow to claim your Yelp business listing\nHow to create and claim your free business listing on Yahoo\nHow to create and claim your Bing business listing\nHow to get your business listed with the BBB\nHow to add your business to Citysearch and claim your listing\nHow to create and claim your free business listing on Manta\n2. Get and respond to customer reviews online\nWhen you have your online profiles set up, you can start getting customer reviews on those profiles.\nCustomer reviews are crucial for gaining even more customers for your salon. And the quality of your reviews can really make or break your business. \nHere are a few ways you can encourage your customers to give your salon an online review:\nAsk them for one. After you provide a great service and your client is just thrilled with their new look, ask them if they’d be willing to share their experience with others in a Google or Facebook review. \nPut up “Rate us on Google” signs throughout your salon. These can be on the front door, at the checkout desk, or even cute stickers on the mirrors. This will remind customers that you would love to hear from them. \nText your customers an invitation or reminder to leave your salon a review with a direct link to your Google listing or Facebook page. \nWhen you do start getting reviews, be sure to respond to all of them within a day or two of receiving them. Say “thanks” to those who leave good reviews, and if you ever do receive a bad review, respond politely and professionally.  \nGo deeper: \nHow to respond to negative reviews\n\n3. Set up a free website for your salon\nBeyond your free directory listings, you should absolutely have a website for your salon. And you can totally create one for free!\nSome free sites that we like to use include the following:\nWix\nSquarespace\nGoogle My Business\nKeep in mind that if you do want to have your own domain for your website or will have a web hosting service, you might incur some small fees. But you definitely need a website. Read \nwhy every small business needs to have a website\n.\n4. Improve your local SEO\nSetting up a website and adding your salon to online directories are both key steps to improving your SEO (search engine optimization). This is how you show up higher in the search engines. \nThere are several other free ways that you can improve your SEO:\nWrite awesome content on your website about your staff and services\nStart a blog\nOptimize your website for specific key phrases\nGet other websites to link back to yours\nOnce you’ve done those, check out our guide: \n15 free tips for better local SEO\n \n5. Create a blog on your website\n\nStarting a blog\n is a great way to provide more content that you can use to advertise your salon, and, as we mentioned, it can help improve your SEO too. Adding fresh, new content to your website on a regular basis sends great signals to the search engines. \nHere are a few ideas that you should definitely steal for your blog:\nHow-to articles and videos\nNew trending styles\nHair/nail care tips\nBest new products to try\nNew products you are selling\nAsk your employees if they’d be willing to contribute one or two blog posts every few months and you’ll have plenty of regular content to share. \n6. Get on social media\nWe cannot stress the importance of social media enough. Hair and nail salons can really capitalize on so many opportunities from these free channels. \nMany people are reaching out to salons directly on their social media channels, particularly Facebook and Instagram. \nFor such a visual profession, social media is the perfect place to show off your work and gain new customers who are looking to mix up their style. \nHere are a few tutorials to create your social pages:\nFacebook\nInstagram\nLinkedIn\nTwitter\n7. Partner with local businesses\nPartnering with other businesses in your community can be a powerful strategy for obtaining referrals and new business. You could partner with local bridal boutiques, wedding planners, or even florist shops to offer combined deals on your complimentary services. \n8. Try some email campaigns\nGive email campaigns a try and see how they work with your clientele. Be sure to write a really compelling subject line and keep your email short and to the point. \nThe most successful email campaigns usually offer some kind of promotion or deal for your customers to get it on. \n9. Get in contact with your chamber of commerce\nYour local chamber of commerce is a great resource to take advantage of. They want to help small businesses in their community succeed, so typically they will offer marketing resources and add your salon to their website to help get the word out. \n10. Participate in community events\nVolunteering in your community is the perfect way to get connected with new customers and spread awareness of your salon. People like to see local businesses getting involved and giving back to the community they live in. \nHere are a few ways you can do that:\nVolunteer at a 5k\nParticipate in holiday parades and events\nHelp with city cleanup projects\nProvide free haircuts to veterans\nThere are so many ways you can get involved. Just find the right opportunities for your salon and go for it!\n11. Host webinars and Q&A sessions online\nWebinars and online Q&A’s can help you provide value to customers and non-customers alike. Start a Facebook Live video to share tips about hair care, answer common questions that customers have, or show viewers how to do a certain technique that everyone should be able to do. \nThings like these videos and blog posts that offer some value to others are great ways to show that you know your stuff and that you are passionate about what you do. \n12. Offer fun deals\nEveryone loves a deal. Tap into this reality and get attention. \nOffer cool and fun deals. You could do back-to-school specials, bridal deals, or any number of discounts that work for your client-base. Get creative and start a new promotion to catch people’s attention and get new customers. \n13. Start a referral program for your salon\nLet your current customers advertise for you by creating a referral or customer loyalty program. Offer a discounted service for a current customer if they refer a new client to you, and offer that new client the same deal. \nLearn more with this article: \nThe 6 elements of an effective customer loyalty program\n14. Create short promotional videos \nPeople are visual. That’s why we spend so much time scrolling through social media apps. We like pretty pictures and cool videos. Take advantage of that by creating some promotional videos for your salon that show off your work. \n\nBiteable\n is a popular (and free) video software that we like to use. \n15. Start a YouTube channel for your salon\nCreate a YouTube channel for your salon where you can share all of the cool new videos that you just produced. Tutorials, promotional pieces, webinars–all of those are great for sharing on your YouTube channel. \nLots of people love to look up hair and nail tutorials, so you may even produce a video that goes viral and gives your salon a lot more attention. \n16. Share your salon’s testimonials online\nWhen you get new reviews online, share them. You can share reviews across social media channels or put a review feed on your website. \nYou could also create videos of customers sharing their testimonial of your salon. These appeal to that visual side and help add a more personal touch to your salon by allowing customers to see someone sharing their experience, rather than just reading about it. \n17. Put up flyers\nFlyers still have their place in the advertising world. Create your own flyers to advertise your new promotions or openings at your salon. Place these in high traffic areas like grocery stores, college campuses, and even your own shop. \nCanva\n is a great free resource to use for creating professional flyers. 

17 free local advertising ideas for your hair or nail salon

In this article:\nWhat is SEO for small businesses?\nHow to optimize local SEO for your small business\n4 free ways to show up better in local searches\nHow reputation management software can improve SEO\nSEO, or Search Engine Optimization, is a buzzword that every business student learns to parrot and consultants toss around like they know how it works. But what is SEO and how do you optimize it for your local business? Does SEO even matter for super-small shops? We’ll tell you below, and show you the free steps you can undertake to improve your ranking in local search.\nThe truth is, local SEO definitely matters. Some stats for you: nearly 9 out of 10 of people conduct \nonline\n searches for \nlocal\n businesses, 97% of people read online reviews for local businesses, and most of your potential local customers trust those reviews as much as a personal recommendation from family or friends. \nSo whether you run a roadside taco stand, a pet grooming truck clinic, a pressure washing business, a nail salon, or any other local business, you need to be paying close attention to online reviews and to how you show up in online searches.\nIn relevant terms for small business, the process of improving your rankings in these searches is effectively “SEO.”\nWhy local SEO is vital for small businesses\nOne reason local SEO is vital is that, according to a recent report from Google, \n“near me” searches\n have increased by 200%. A “near me” search takes place when a (usually) mobile phone user searches stores, restaurants, hairdressers, auto repair, ATMs, gas stations, dry cleaners, and whatever else “near me.” \nThese specific, “near me” searches, as well as more organic mobile searches, are exploding in popularity, which can mean a nice jump in business for you—if you know a few key ways to show up better in these local search results. (See our list below)\nWhy SEO for larger firms is big business\nFor larger businesses, SEO has become somewhat of a dark art because search engines like Google are very tight-lipped about what exactly determines search performance and rankings. The truth is nobody outside of Google (and likely very few people \ninside\n Google) really knows exactly how Google’s SEO algorithms work, particularly as they are constantly being updated and Google refuses to tell anyone the details.\nThere are “best practices” and commonly understood techniques to improve website SEO: Optimize and be consistent with indexing and key terms on all pages. Don’t try to “game” the system. Don’t repeat content. Don’t stuff pages with keywords or farm worthless links. Don’t attempt to be what you are not… or Google will ding you and you’ll actually show up WORSE than before.\nHowever, once those are done, the nuts and bolts of how to actually achieve further improvements are nebulous, which is why there are hundreds of “SEO companies” that will be happy to take your money in exchange for attempting to boost your enterprise webpage’s performance and/or your ranking in search results.\nFor small, local shops, paying for professional SEO services may not make sense\nOn the other hand, for small businesses without a strong, high-value e-commerce website with hundreds or thousands of indexed pages, “enterprise SEO” and its associated costs don’t make sense. \nThat being said, there are several easy-to-undertake things that small business owners can do to optimize and improve their business’ rankings in local search results, which is of course what really matters for small, local auto shops, hair salons, dentists, restaurants, dog groomers, etc. \nFour free tips to improve local SEO for your small business\n1. Claim all of your business pages\nBefore you can optimize your online presence, you need to OWN your online pages. Review sites like Google My Business, Yelp, Facebook, and TripAdvisor allow reviewers to post content about your business \neven if you haven’t created a page there\n, and will continue to collate future reviews on that page until you officially claim it.\nSo, even if you have no interest in building a website for your business, it’s vital that you claim your business listings on all the relevant review sites. (For example, restaurants should also claim their OpenTable pages.)\nHow to claim your Google My Business listing\nHow to claim your Yelp business listing\nHow to claim your business listing on TripAdvisor\n2. Complete all the optional fields and add quality photos to your business profile on review sites\nIn our article “\nThe top 5 things every small business should include in their Google My Business listing\n,” we go into greater detail, but the TL;DR version is: fill in as much information as possible—including all the optional content fields—and add some attractive photos to represent your business. All else being equal, the business with more information and relevant detail in its business profile will likely rank higher in a search than one with less.\n3. Read and respond to all reviews\nAccording to a recent article by Chatmeter.com, Google has confirmed that “responding to reviews improves your local SEO.” Just exactly what they mean by “confirmed” is open to some interpretation, but it does seem clear that Google acknowledges the importance of being actively involved with the online review process in boosting local search rankings.\nApart from that, it just makes good business sense to reply to your reviews. In addition to simply being polite (if someone says “thank you” or “can you help me with a problem?” to you in person, do you respond to them or ignore them?), responding to all reviews shows your current customers you value their opinions, and shows potential customers you are actively engaged in the business and that you take feedback seriously. This improves loyalty and attracts new customers.\nSmart business owners also see reviews as valuable insights into their customers’ experiences. Large businesses pay millions to learn what their customers think… but you can get those insights for free from online reviews. Your customers may point out legitimate issues in your products, services, or facilities, and you can learn from them and take steps to improve.\nThe best reason? As we discuss in our article on \nhow to respond to Google reviews\n, studies show what when businesses start replying to reviews, they increase both the total number of reviews received and their overall rating. And a better rating means more money in your pocket.\nAccording to a Cornell report, a one-star increase in your rating can increase your revenue by up to 39%.\n4. Work to get more reviews\nNotice we didn’t say “buy reviews,” “bribe people for good reviews,” or “write fake reviews.” These hacks could get you in hot water with the review sites or, even worse, the Federal Trade Commission.\nThe best way to get more reviews is to simply ask—but ask in the right way. Don’t ask for a “good” or “5 star” review. Don’t promise discounts or free products in exchange for a good review. Just find ways to get feedback from your customers and encourage them to share their experiences online.\nGo deeper: \nHow to get more reviews\n\nSources:\n
\nhttps://www.chatmeter.com/blog/google-confirms-responding-to-reviews-improves-your-local-seo/\n

The simple (and free) method small businesses are using to climb local search rankings

In this article:\nAdvantages of starting a home-based business\nDisadvantages and caveats to having a business in your home\nThinking of leaving the rat race? Sick of hearing Taylor Swift on your office sound system? Want to spend more time at home with your family or significant other? You may be ready to start a home-based business.\nHowever, it’s not all beer and skittles, as our grandpappy used to say. There are significant and unique benefits, but there are a lot of potential downsides also.\nLets go over some things you should be aware of before you start a home-based business.\nWe’ll give you the bad news first:\nDisadvantages and caveats to starting a home-based business\nRestrictive local and federal laws and zoning regulations\nDepending on where you live and what type of business you’re thinking of starting, you may be subject to local or federal statutes.\nBe sure to consult your local zoning laws, chamber of commerce, city business organizations, federal regulations, and HOA bylaws to make sure it’s even legal to run a business out of your home.\nDifficulty separating work time from family time\nPeople who create home-based businesses may have a hard time keeping “home” and “work” time and resources separated.\nMany times, everything at home becomes subsumed in “the business” and this can cause a lot of friction with family or significant others.\nwife angry with busy husband working from home\nWork hard to maintain dedicated “work hours” and “work space” at home, and try to leave it all behind at the end of your workday.\nMore interruptions\nDepending on how “hands on” you are expected to be with your significant other, spouse, or kids, you may experience more interruptions to your workday when you have a home-based business. \nOf course, a brick-and-mortar shop can have a lot of interruptions as well, but an owner might consider them part of the cost of doing business.\nIt may help to take a similar approach at home and look at these interruptions to your concentration or tasks as part of the price you pay to receive all the benefits of working from home (and there are some great ones! See below).\nDifficulty getting funding \nInvestors, banks, and other purveyors of business capital may view home-based businesses as “less serious” than brick-and-mortar shops, and you might have a harder time justifying loans, cash flow advances, or other needed funding.\nbusiness loan form denied for home-based business\nThis is likely not a serious concern if you have a solid business plan and take your home-based business as seriously as you would a “real shop,” but it could potentially be a concern for some investors and you should be aware of it.\nKeeping accurate records is vital\nAre you organized? Can you maintain very accurate transactional, financial, and tax records? If not, don’t start a home-based business.\nExcellent financial records are essential for \nany\n business, but smaller businesses, particularly sole proprietors who work from home, face a higher risk of getting audited by the IRS, so it is crucial to keep impeccable records and all your receipts in an organized way. \nBusiness and personal expenses can be difficult to separate\nSince your business space and your domicile are now the same, this can create a headache when you face the need to keep your business and home expenses separate and distinct.\nBe ready to accurately estimate and record any use of personal space, vehicles, resources, utilities, etc. if you want to get the tax benefits of starting a home-based business (see the “tax deductions” section below).\nWarehousing or shipping concerns \nIf you sell products and have to worry about maintaining inventory and warehousing/shipping products, a home-based business can make things more difficult. \nIt is sometimes possible to find enough warehouse space at home, but this comes with a host of potential gotchas (local laws, pests, appropriate climate control and security, and angry spouses are just a few). \nGo deeper: Read our \ncomplete guide to fulfilling and shipping orders\n to learn more about some of these concerns and issues.\nPayment processing or accepting alternative payment methods\nSimilar to what you’d need for a brick-and-mortar business, you’ll need some way to take customers’ payments if you start a home-based business. \nSome holdouts still transact mostly by check, but for businesses that sell goods and services it’s pretty much table stakes to take credit and debit cards, which can add significant expense.\nBe sure to talk to your friendly processor representative or merchant service provider and see what kind of a deal they can cut you. Don’t pay for features you won’t need as a home-based business.\nNow that we’ve touched upon some of the potential downsides of starting a home-based business, let’s get to the good stuff.\nThinking about finding commercial space instead of starting a home-based business? Read our article on the \ntop things to consider before renting your first business space\n.\nAdvantages and benefits to a home-based business\nReduced business overhead\nIf you don’t have to pay for business premises, upkeep, or a commercial lease, you can drastically reduce your cost of doing business. \nSince you can share the utilities, maintenance, supplies, and mortgage expense with your primary domicile, and aren’t under any revenue-sharing obligations from a commercial lease, you can save huge… and don’t forget about your tax deductions. \nTax deductions for home-based businesses\nYou might be surprised to learn the tax benefits of having a home-based business.\nWhen you run your business out of your home, you can “write off”—or deduct from your taxable income—an amazing array of expenses, including all or part of your advertising costs, gifts for customers, business banking fees, business loan amortization and interest, “office expenses” and supplies, phone and internet lines, subscriptions to trade publications or newspapers, even a portion of your mortgage, mortgage insurance, homeowner’s insurance, maintenance, utilities, and HOA fees! \nHere’s a great article about all the various \nhome business tax deductions\n available to you.\nMore control of your business and personal environment\nBrick-and-mortar store owners have some say in how their store looks, feels, sells, and operates, but make no mistake, the commercial landlord and lease owner can be quite annoying and forceful in their demands regarding your facilities and finances. \nRead our article on \nhow much it costs to rent space for a small business\n to learn more.\nIn addition, retail customers have expectations about when you should be open, how your store should operate, what music you play (or don’t), what holidays you take off, etc.\nWhen your business operates out of your home, you make the call. \nAnd, you can structure your home workspace however you want. No more Backstreet Boys blasting from the office speakers (unless that’s your bag. You do you).\n\nWhen you’re free from the corporate nightmare of the open plan office or cube farms, when you’re free from noisy environments, smelly co-workers, annoying salesmen, and other distractions… you can make your home business work space a nirvana of creativity and productivity.\nWear what you want\nThis may not seem like a big deal to some people, but for others it can be incredibly freeing to not have to put on the restrictive, button-down corporate costume, strangling tie, powerskirt, or other stuffy, uncomfortable business attire.\nIf you find you work effectively rolling out of bed and working in your jammies and bunny slippers, go right ahead. (We suggest at least combing your hair and putting on a shirt for business video conference calls, though… don’t ask.)\nWork when you want\nHome-based businesses typically don’t have a string of customers stopping by who expect you to be “open” 12 hours a day, six days a week.\nIf you find you’re most productive late at night and prefer getting into a “groove” and working a marathon 14-hour stretch, there’s nothing to stop you (depending on family/relationship needs).\n3 a.m. brainstorm sessions? No prob. Want to dial it back or take some time off? If it’s financially feasible, go ahead. You make the call.\nIf you prefer to keep regular “business hours,” you can do that while still maintaining more flexibility for personal relationships. \nEasy commute!\nPeople who have worked in locales where the typical commute can average an hour (or two!) each way have expressed to us that they almost don’t know what to do with all the time they have when they start a home-based business.\nMore accessibility to family or significant others\nWhen you don’t have to commute or be at work at a certain time, you can be more flexible in your schedule and be there when your spouse, kids, or significant other need your attention.\n\nLive wherever you want \nThere may be some limitation to this depending on what type of business you run, but if you’re a one-person shop that produces products or services delivered via remote warehousing, drop shipping, or digital transmission, you can likely run your business from any location with a reliable internet connection or cell-phone signal.\nWant to live in a treehouse in Borneo? Make it happen, captain! Looking to \nstart your business in a small town\n? Go for it!\nMore time at home for what’s important… and for yourself\nWhen you don’t have to be “at work” to keep up appearances or conform to others’ expectations, you can take the time you need to meditate, cook, exercise, read, listen to music, or whatever else fills up your personal batteries. \nThis can mean you do better work and be more productive in addition to being happier and more personally fulfilled. And isn’t that why we work in the first place?

Advantages and disadvantages of starting a home-based business

In this article:\nWhy the average cost of rent for a small business is not the most useful statistic\nThe best way to approach your landlord about your rent to income ratio\nWhat percentage of your business should be spent on rent\nThe “unit cost” method of determining what you should pay for rent\nIf you’re a current business owner wondering if your rent is too high, this article is for you. If you’re considering renting business or office space for the first time, or perhaps the owner of a growing business wanting to move to a larger commercial space, please refer our article: \nHow much does it cost to rent space for a small business?\n \nIt’s time to address that gut feeling that you might be paying too much in rent. In this article, we’ll explain why questions like “what’s the average cost of rent for a small business” aren’t as useful as using a ‘unit economics’ approach.\nWe’ll also show you how to use unit economics calculations to determine if you’re paying too much for your rent, and discuss the best ways to negotiate a lower rate.\nThe “average cost of rent for a small business” and the wrong way to negotiate your lease\nWhen you’re trying to determine how much your rent should be, it’s tempting to try to research the average rent for a small business.\nMuch like when a renter searches through \naverage rent reports\n for a specific city to find their city’s average rent, this is the wrong approach and doesn’t really tell you anything useful (we’ll explain why below).\nFurthermore If you “just know” you are paying too much in rent, and you try to renegotiate, the first thing your landlord will say is, “Show me the proof! Show me the numbers.”\n \nwoman arguing with business landlord for what should I pay in rent\n\nResponding with, “But… I just \nknow\n you’re charging too much!” is a shortcut to stalemate and could even jeopardize your relationship.\nIf you want to make a strong case and generate black-and-white numbers, you need to know the “unit economics” of your small business.\nAlan Wille, CEO of Klipfolio, a business performance metrics company, defines unit economics as looking at the direct revenues and costs associated with the most basic element of a company’s business model. In other words, unit economics breaks down everything about your business into individual pieces.\nUnit economics is a more accurate view than “how much is rent for a business”\n“Done properly, a unit economics analysis will highlight opportunities, expose gaps, and direct you to optimal strategies for maximizing your profit,” Wille says.\nBelow, we’re going to look at how unit economics applies to rent. Let’s dive in.\nExamples of unit economics vs. average rent for a small business\nFor the sake of simplicity, let’s avoid spreadsheets and jawbreaking financial acronyms to learn about unit economics. Here are examples boiled down to help busy people to make quick, smart decisions.\nOne product costs $5 to produce, stock, and sell. It sells for $10. Looking at the economics of this unit, you can tell there’s a 50% profit margin.\nTo acquire one customer, it costs $25, between the online marketing campaign and paying the hourly employees on the sales floor. One customer typically spends $65. Looking at the unit economics, you can analyze your cost to acquire a customer (CAC) might be a little high, but still positive.\nOne square foot of space costs $6/month. But in one month your average gross revenue is $48,000. If your store is 1,000 square feet, that’s $6,000 a month in rent. Run the calculation and your rent is 12.5% of your monthly gross income.\nLet’s dig into this last example to tell if you’re paying too much rent as a small business.\nbusiness closed sign for how much should you pay in rent\n\nLearning your unit cost can keep your small business profitable.\nWhat percentage of a business’s revenue should be rent?\nTo calculate this commercial price to rent ratio, we’ll look at two things: (1) your type of business and (2) your competitors. Keep in mind the following percentages are rough and not exact. Use them as a benchmark.\nRestaurants: \nWhen calculating a good rent percentage for restaurants, the general rule of thumb is your total occupancy cost (rent and additional fees for property taxes, insurances, etc.) should not exceed 6-10% of your gross sales. (\nsource\n)\nAuto shops:\n The typical full-service auto shop spends 12-13% of annual gross revenues on rent. (\nsource\n)\nRetail stores:\n Retailers should target a base rental rate that is no more than 5-10% of gross annual sales. (\nsource\n)\nLaw firms: \nAttorney offices should expect to pay 6-7% of gross revenue, and even up to 15% for a prestigious address. (\nsource\n and \nsource\n)\nHair salons:\n Rent and property taxes should range from 3% for a remote location to 10% in a well-trafficked mall. (\nsource\n)\nKnowing these benchmarks, the next figure we need is gross sales. Finding this number is easy. How much money did your business make last year? What was the total sales for each month? Some small business owners will know this figure off the top of the head.\nThe last figures you’ll need is your business’s square footage and rent cost. We’ll provide different sums for the sake of illustration.\nFinally, here’s the simple calculation to determine if you’re paying too much in rent.\nGross sales / square footage = sales per square foot\nIf average monthly gross sales are $50,000 for a 6,000 square foot restaurant (average size for a Ruby Tuesday), then sales per square foot is $8.33.\nIf rent is $2/square foot, divide it by sales per square foot to get your percentage of income that goes toward rent.\n2.00 ÷ 8.33 = 24%\nIf this number is greater than the benchmark for your industry — restaurants, in this example, at 6-10% — then you can see you are paying too much in rent.\nIn our example, the restaurant is paying far too much in monthly rent. For every $8.33 in revenue that a square foot generates, $2.00 or nearly one-fourth of that is going to the landlord. This is too much, according to the industry average.\nThis calculation shows the unit economics of your rent, broken down into the revenue and expense of a single square foot. Why is this important? The restaurant owner in our example can now use the unit economics of their space to negotiate a lower rent agreement with the landlord.\nCalculate how much your business should pay in rent\nUse unit economics to calculate the return on each part of your business by analyzing the revenue and expense incurred by a single unit. Units can be anything.\nIn this article we focused on rent and the basic unit of a square foot, but you can use unit economics to analyze the return per employee, per desk, per customer, per product, per hour, etc.

Local business owners: are you paying too much in rent?

In this 6-minute read:\n4 advantages (for vendors) of accepting card payments\n5 advantages (for businesses) of paying vendors and suppliers with a credit card\nHow you can pay nearly anyone using a credit card\nThough consumer credit card use is growing by leaps and bounds, business-to-business credit card payments are still not as widely adopted. In fact most businesses still pay at least half of their bills using paper checks.\nThe reasons some vendors and suppliers don’t accept credit card payments are varied, but primarily the concern is the added fees associated with credit card processing.\n\nCredit card processors\n and \nthird-party payments facilitators\n generally charge between 2% and 5% to businesses that accept these payments, and for some vendors, these fees can eat up a significant portion of their profit—or all of it. \nHowever, there are several advantages to both payer and payee when you source your business bill payments using a credit card.\nLet’s go over a few perks (for the vendor) if they accept card payments, and then we’ll talk about why paying vendors and suppliers using a credit card can provide more than just convenience for you and your business.\nAdvantages (for vendors) of accepting digital payments\nSo why should vendors and suppliers consider accepting credit card payments? Here are just a few benefits: \n1. Credit card payments are much faster than mailing a check\nCredit card payments are reconciled nearly instantly, so vendors get their money much faster than when you mail them a check. This means they can balance their accounts faster and more accurately. \n(Image)\n\n2. Credit card payments are more secure\nThere are multiple levels of validation and identity confirmation happening behind the scenes whenever your vendors accept a credit card, particularly if they use EMV chip validation. The risks associated with accepting a check include insufficient funds, identity fraud, etc. \nCredit card processors help assume the risks (which is part of why they charge a fee), so vendors can be more confident of the funds arriving in full when they accept digital payments.\n3. It can help make a vendor’s business more “legitimate”\nCredit card processing companies generally have a robust underwriting process as a part of approval, so when a vendor accepts credit cards, it can give their business more legitimacy and credibility than if they only accept cash or checks. Some consumers will only do business with companies that accept credit cards, and this feeling can translate over when those consumers start businesses of their own.\nAlso, vendors and suppliers are in constant fear of being outbid and outperformed by their competition. If the competition is accepting credit cards and you aren’t, and prices are similar, the vendor that accepts digital payments may attract more business.\n4. Accepting cards can improve cash flow and save valuable time\nAs we discussed above, credit card payments arrive much quicker than by check—most processors can get your funds deposited into your account within a couple of days max, versus 4-6 business days for the mail to arrive, plus a few days or even a week for the check to clear a bank. And that’s AFTER whatever delay there is in getting the payer to write and mail the check in the first place, which can take weeks.\nSince your funding is available much sooner, this frees up cash flow and all the time spent preparing and sending out invoices, and processing paper checks.\nYou may also like: \nWhat’s the cheapest way to accept credit cards?\n \nAdvantages (to businesses) of paying vendors and suppliers via credit card rather than by check\nNow let’s talk about some of the benefits to businesses who pay vendors using a credit card, rather than sending paper checks.\n1. Credit card payments save time and improve cash flow for businesses\nAs noted in the section above, sending a check can take quite a few days or even weeks to complete the process and clear a bank. When you pay vendors using a credit card, you speed up the process and free up cash for other business expenses.\n2. Increased purchasing power and business credit\nSince you don’t have to pay off your card balance for at least 21 days (and often longer, if your account is in good standing), you can effectively borrow business funding at 0% (plus you get perks and rewards) to pay vendors and suppliers. \nIf you need to spend a little more than you currently have in your bank account to order supplies for a large order you’re working on fulfilling, a business credit card with an appropriate limit can make that easy. (Just be sure to pay it off once you sell the widgets you make using the supplies.)\nIn addition, as you regularly pay your credit card statement on time and use much of your available credit, you can increase the credit limit available to your business and improve your business credit rating, which can lower your interest rate for business loans and other expenses.\n3. Perks, miles, rewards, cashback, discounts\nNearly all credit cards offer perks and advantages to members, and for small businesses this can be a huge asset. You might get a price break or increased cashback for using your business card to pay vendors and suppliers.\nBusiness owners who rack up lots of airline miles using one of these cards can pay for a significant portion or even all of their business travel expenses, get discounts for business expos, enjoy free concierge service, get free car rental insurance and discounts, and much, much more.\n(Image)\n\nSome businesses use their cashback bonuses to improve their business, buy equipment, pay for employee team-building events, pay for company car maintenance, or even pay utilities. The uses for rewards points/cashback bonuses are almost limitless.\n4. Paying all your vendors, suppliers, and bills with one card vastly streamlines your accounting process\nWhen you have to keep track of expenses and bills for your business, the simpler the better. If you can move all of your monthly business expenses and vendor payments to a single card, it’s much easier to keep track of, plus you get the benefit of your credit card statement to help you keep things accurate.\n5. It’s more secure than writing a check\nWhen you pay with a credit card, your issuer and processor help absorb the risk of fraud. (This is one reason they charge fees for the service.) When you mail someone a check, you are giving them your bank account (via the routing number and account number) and your signature. \nSolo makes it easy to pay and get paid\nSolo is not a bank, but is a financial super-app for small businesses, freelancers, sole proprietors, contractors, and more. Solo is the easy way to pay and get paid. Your customers don't have to sign up to pay you, and can use several payment methods, including Apple Pay, Google Pay, and cards. QR codes make it easy to get paid, and you can easily cashout your Solo account balance for free, or spend it using your Solo Cash Card anywhere Visa is accepted. Learn more at\n \nSolo.co\n.


87 articles found in “Resources”

How and when to incorporate your small business

17 free local advertising ideas for your hair or nail salon

The simple (and free) method small businesses are using to climb local search rankings

Advantages and disadvantages of starting a home-based business

Local business owners: are you paying too much in rent?

Advantages of paying vendors and suppliers with a credit card

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