Don't Start a Business until...

You can afford to pay someone to run it for you. Yeah, that's right you're totally wasting your time starting a business unless.

a) You are 100% sure it's going to a huge success
or
b) You are already making enough money to pay people to look after the bookkeeping and paperwork.

You see, starting a business is really easy if you're a sole trader or sole proprietor but it also comes with a lot of headaches. Such as paperwork, reporting and tax implications.

So before starting a business you really should ask yourself if you have enough time and energy to deal with all the other associated tasks that the government requires from you as a business owner.

And if you're an artist or creative then, definitely don't go down this route until you absolutely have too as it'll suck the creative life out of you. Keep what you do as a hobby for as long as you can.

And did you know that 8 out of 10 businesses fail in the first 18 months? Well, that was a shock for me too, but I also read somewhere that over 50% of businesses don't survive past the first 5 years so somewhere in the middle must be the real number. Regardless, your chances are less than 50% of making something stick in the long term.

Trust me, tax, registrations, bookkeeping, and accounting are massive burdens on a small business and even more so if you're thinking of starting a company.

Don't Start a Company until...

You can afford to pay someone to run it for you. Yes, it's actually more relevant when starting a company because there are legal implications if something goes wrong and you are the director.

It could also mean jail time even if you weren't the one breaking the law because as a director you are ultimately responsible what happens in the company.

Of course, people try to get around this by starting an LLC (limited liabilities company) but you are only protected from someone suing you personally but the law is still relevant for an LLC.

Here a few of the other company types you could consider

• A corporation
• A nonprofit organization
• A limited-liability company or partnership

But all have associated tax implication and government reporting that needs to be done periodically, so you'll want to be earning enough money to pay professionals to manage this aspect of the business.

And this is the problem. Most businesses don't earn anything in the first few years.

Sure you might feel like you're earning money, but once you pay the startup costs, buy assets and materials, then cover the professional fees to manage the accounting, it might not actually be as much as you think.

The mindset people have when starting a business is its tax deductible and you can carry losses forward meaning you'll pay less tax in the future. But if you have very few overheads then the extra burden of a company might not make sense until you are earning a decent income.

I think the 'Start a business/company' mindset is a little outdated, as in the past you would need plant equipment or a shop front and yes you'd certainly want to take advantage of the tax breaks as you depreciate the assets over a number of years.

But times have changed.

The Entrepreneurs of today, work from home, share co-working space or even conduct their business out of coffee shops. So the need to depreciate assets under a company umbrella isn't always relevant anymore.

Now don't get me wrong, starting a business is still a thing, but just try to a avoid it for as long as you can and don't make it the first thing you do after stumbling upon a great idea.

Most countries recognize hobbies as a valid income source and may not even require you to declare it, which means more money in your pocket. However, check with your local authorities in your country to find out what your limits are for running a hobby from home.

And if you're making tens of thousands of dollars in the first few months then for sure, you're on a winner and you should set up a legal structure as soon as you can, to prepare yourself for rapid growth.

But if you're like the rest of us, struggling to earn even a basic wage online then hold back those grand ambitions to be a CEO or Boss and instead focus on developing what it is you are selling to ensure the creative juices aren't sucked out of you before you even get started.

If you found this post helpful in any way I'd appreciate a like or a comment to let me know I'm delivering value while I'm here.

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