Living the Dream: The ins and outs of a design company, Part II

In my previous article, I introduced you to the enjoyable and creative side of starting a design company. This time around, I am going to tell you about all of the not so enjoyable things that you should look forward to when deciding to go out on your own. There is a couple of important legal and business things that you should be fully aware of.

Proper Licensing

This is a pretty important part of starting your brand new business, and with good reason. This keeps you in good standing with all of those nifty little state and government agencies that we all love so much. When you first start your business, you will need to decide how your business will be formed and get the proper licenses to conduct your business in that manner.

There are really three different options here – Sole Proprietorship, Limited-Liability Company (LLC), and a Corporation. All three of these options provide different levels of liability, means of operation, and tax benefits.

I am not going to go into detail for each of these, but please look each one up and research which is right for your business. For DigitalRealm Media, since we are a partnership, we chose the Limited-Liability Company route.

The typical freelance person or “1 person show” as it is commonly referred to would most likely opt for the Sole Proprietorship route. This will also vary by state and country so check up on your local laws for this information.

Another important part of this decision is whether or not your business will be home-based versus being in a public office or building. There are numerous laws that affect both of these situations so look into those closely before you settle on where your business will be established.

Accounting/Taxes

Again, another important topic that you should take very seriously! The most important part of running a business is keeping accurate financial records and making sure that you pay and file the correct taxes.

Get yourself a bank account in the name of the business and use this for all business related finances. Most accounts are very cheap or even free to start. It is very important that you keep personal finances and business finances separate, so a business bank account is essential. It also looks more professional and gives your business a stronger foundation to stand on.

Next, either hire an accountant or purchase yourself some good accounting software. Accountants can be really expensive and you may not be able to justify the price of doing this, but it can save you tons of time, money, and trouble in the long run.

If an accountant is not right for you, purchase accounting software and keep everything yourself. At DRM, we use QuickBooks software for all of our accounting needs and it works perfectly. It is inexpensive and walks you through everything you need to know to make sure that you are keeping things accurate and in order.

For the tax side of things, make sure that you are well versed in the tax laws for your local city/state. Most all require that you file and pay some type of quarterly income tax. I really suggest that you do not mess around in this area; it will not be very pretty if you do!

Once you have established your business, your mailbox will begin to fill up with various forms, documents, and literature that you should pay close attention to. Most all of this material will need to be submitted back to the proper authorities in some fashion.

So there you go! This article, combined with my previous article, should give you a really good foundation to build upon for your business. From this point forward, I will dive into other various topics that relate to running a design company. We will look at clients, various documentation methods, and specific topics that relate to the design industry.

Follow the series:

1. Living the Dream: The ins and outs of a design company, Part I
2. Living the Dream: The ins and outs of a design company, Part II

Cory Perry is the co-founder and Creative Director of DigitalRealm Media, a small design studio located in Greenville, SC. You can read more about DigitalRealm Media and Cory by visiting the website at digitalrealmmedia.com.

Read some related articles:

1. Living the Dream: The ins and outs of a design company, Part I Enjoying what you do for a living comes down to one thing, doing what you love to do. For me, that was designing web and...
2. Counting Pennies! One of the most important factors that comes along with operating a business venture is having proper knowledge and control of the financial state of...
3. Selling the Dream The essence of Selling the Dream, Kawasaki's new book: Evangelism comes from Greek, which means bringing the good news. When you have a product or...
4. At Least Keep the Important Balls Up in The Air! Entrepreneurs are infamous for multitasking; and, that usually means stretching themselves thin. They find themselves juggling a million balls, never realizing that doing “too much”...