The work environment has shifted in the past two years, reshaping our career goals and expectations. For many people, the COVID-19 pandemic has meant leaving one employer for another, but for millions of Americans, this time has been an opportunity to become their own boss.
Since 2020, the labor market has drastically changed. People have left or switched jobs, shifted to remote working or hybrid work, and work-life balance has become a priority. For this reason, you might be looking for a change of pace yourself, and a sole proprietorship may be the answer you need for your workplace concerns.
In 2022, 50.5 million Americans quit their jobs, according to the Bureau of Labor Statistics. This is the highest number of resignations on record beating out the 47.8 million workers who quit in 2021. Factors contributing to the number of people quitting include low pay, no opportunities for advancement, remote work opportunities and feeling disrespected in the workplace were the top reasons Americans quit their jobs in 2022.
The above reasons may resonate with you as they have motivated many people to take the leap and start their own businesses. In the past year, new business formation was flat with just over 5 million applications versus the previous year with applications hitting a record 5.4 million, according to the Census Bureau.
Starting a new business is a terrifying jump. Although accompanied by many risks, the reward of starting your own business can be gratifying if handled with the proper care and planning.
Before transitioning out of your 9-5, you should write out simple goals to create a concrete idea of what you want to accomplish. Ask yourself questions like what is the purpose of your business, what type of business do you want, who is your audience, what are you hoping to charge, and is it a desired product or service? It is hard to start a successful business if you don’t have a compelling why.
The next important thing to consider is your financial situation. If you intend to leave your current job, you need to have your finances in place while you grow your business. An excellent place to start is considering your living and business expenses. This period to set aside money can depend on your risk tolerance, anywhere from 3-12 months of your current salary.
Business expenses might include paying for equipment and services like software or a computer, office space, advertising, building a website, and establishing an LLC. A limited liability company, also known as an LLC, is a business entity that protects the owner from personal responsibility for its debts or liabilities.
If you are not financially able to make that jump, you might consider starting your journey part-time as a side hustle or saving up and taking entrepreneurship classes to begin planning for your future. However, if you are ready to quit your job and start a business, it is time to create your business structure.
Now is when your planning and organization are essential to the success of your business.
Regarding finances, separating yourself from your business may help you sort expenses and minimize tax liabilities. Separating finances can be done by using different credit cards or bank accounts from that of your personal. Also, it’s important to have an accountant or tax preparer who can help you file your taxes correctly and learn what you can write off as a business expense.
Once you have the details of your business laid out and are ready to promote your new endeavor, don't leave the potential business with your current network on the table. Announce your new pursuit like any other career move and promote yourself. Too many people miss out on opportunities because they are afraid of making their start public.
It's also a good idea to start a new network of other freelancers or small business owners so you have people who understand your situation that you can lean on.
Finally, to get your feet off the ground, ensure you have filled out the correct forms and established your business entity.
We know that navigating the beginning of your business can be overwhelming, but Midland Forms is a personalized service committed to helping you from start to finish. No matter where you are in the process, we can walk you through establishing a new business entity or assisting with an already existing one.
Midland Forms has an experienced team that can easily navigate the many forms and filing requirements as a document preparation service, making this a seamless process for you.
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