For a long time, I thought establishing a business in capitalist America would be the easiest thing to do. I imagined one would just start selling something, and BAM! A company has been created. Now that my business partner (Kimberly Guevera) and I are establishing FIL Learning as an official government-approved organization, we realized that creating and establishing a business is a lot more complex than that. There are a couple of myths that I have debunked in this process, and I would like to share some of them.
Myth 1 - Creating a Business is FREE
As much as I wish this were true, it's not as easy as just telling the government that you want to create a business selling lemonade. First, you have to apply with $50 to the Secretary of State. Then you have to open a bank account so you can start making business. To open a bank account, you need money to deposit into the account, at least $100. Then you need liability business insurance. You can either pay for an insurance broker to give you the best insurance possible for your company (which might be another $100) or you could do your research and hope you find the best fit. Once you find it, paying for insurance is another cost. You finally have all that done, but now you need to buy lemons, water, and cups so you can start selling at the corner of the street. All of this combined puts you already at a loss of about $500.
So the next time you are considering starting a business, make sure there is a need, want, and audience for what you want to provide, and embrace the venture capitalist within you to take the risk and make the investment for your business! Also, make sure you have money because all these costs might not be profitable.
Myth 2 - The Process Is Simple
When a new child comes into the world, it doesn't exist without a birth certificate and it can't start working without a social security number. In the same way, your business doesn't exist without being registered and can't make money without a FEIN number. The process to submit a new record to the government that you want to create a new business can be complex. There is a lot of business jargon and questions, making it easy to confuse the difference between the different roles and entities within your business. Once the business is registered, congrats! It officially exists in this world. But you can't make money off of it yet: your business still doesn't have its social security number. For this, you have to register it under the IRS so that you can create a FEIN number for your business. Sounds easy, but let's be honest: nothing is easy when it comes to the IRS.
As with all things, if you do it enough times, it'll become easier. So keep creating more and more businesses! Hopefully, by your third one, you can easily fill out these complex forms in 10 minutes.
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