Ryonet | #PoweringThePrint
Below is an excerpt from my book, “Made to Make It: A Guide To Screen Printing Success.” Learn helpful tips and tricks on how to run a screen printing business.
Once you’ve given some thought to your niche, it’s time to take a look at whether you have the right business structure, systems and processes in place to support your strategy. If you’re planning to make a business out of screen printing, the first step is that you have to be a business. It always amazes me the amount of people that try to start a business without spending the little bit of time and money it takes to become a business. There are many advantages to “officially” becoming a business that can both save you money and protect your interests. There are also several options you can choose from as to what form or structure you’d like your operation to take.
The first point I want to make is that something is better than nothing. If you haven’t made your venture official, stop what you’re doing now and take care of that. Your work is too valuable to be put at risk. If nothing else, you can file paperwork to become a sole proprietorship or a partnership. Each of these options is pretty straightforward and easy to implement without the need for a lawyer. Of course, the downside of both is that you are literally the business and the business is you. Meaning, you’re personally liable for taxes, losses, debts, judgments, and more. A more sophisticated solution is to file as a Limited Liability Company (LLC). As the name implies, LLCs limit the owner’s personal liability, providing for pass through taxation, among other benefits. LLCs are also reasonably easy to set up, and they don’t require a ton of annual paperwork. But they also don’t provide all of the advantages of a corporation, which establishes the business as a separate tax-paying entity, shielding the shareholders nearly entirely from potential loss.
Corporations conduct business, realize net income or loss, pay taxes and distribute profits to shareholders, who are then also taxed—resulting in a “double taxation.” With that said, they are allowed to take special deductions which can offset taxable income. They’re somewhat complicated to set up and manage, so if you go this route, you’ll need some outside help. S Corporations are similar to corporations, with the exception of the fact that income, losses, deductions, and credits are passed through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. Since founding Ryonet, I’ve launched several new businesses. In my personal experience, the easiest and safest structure for a small business owner is an LLC. Ryonet is an S-Corp which works out great for us but takes some management and legal parameters to run properly. I can honestly say that Ryonet didn’t operate as an official S-Corp until about 2010. We operated more like an LLC.
After you’ve chosen a structure, you should think about what you want to call yourself. If you’ve chosen almost any structure other than a sole proprietorship, you’re going to need a name other than just your own. A registered DBA, or “Doing Business As,” allows you to create a brand for your business thatwill survive even if eventually you decide to turn over leadership or sell. It gives you the opportunity to communicate your niche. It provides a platform to prove your values. And it helps you build preference and loyalty. Not every state requires you to register your DBA, but most do, so do your due diligence.
When you’re ready to pull the trigger, register your DBA with your county clerk’s office or state government. A quick web search for “register a DBA in the state of X” should get you there. But that’s not all you need to do to make your new business official. Before you start writing checks, you’ll need a business bank account (and potentially an account you can send wires from). And before you can get that, you’ll need a federal tax ID number. Depending on your business structure, you can either use your social security number or file for an Employer Identification Number (EIN). Filing for an EIN is easy enough; you can do it online .
If you have a partner or plan to have employees, an EIN is a must. CREATING YOUR PERFECT DESIGN 53 But first, you’ll need to get a business license (and resale certificate), which is again an easy process you can do at the same time you register your DBA. Once you’re up and running, you should make sure you’ve got a way to accept payments. There are a lot of merchant processing solutions out there, but more and more people are moving to cloud platforms like Shopify for ecommerce (and beautiful websites, built from a library of templates), and/or Square for onsite card processing via a smartphone or iPad. Depending on how you plan to sell your products, either of these is a great option.
Like what you read? Get more great business tips on running a screen printing business from my book, “Made to Make It: A Guide To Screen Printing Success.”