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  • #969938
    imakeapps
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    Hi everybody,

    APOLOGIES IN ADVANCE! This post turned into a bit of an essay!

    I’m a student with only a semester left of study, and I’m thinking about starting a side business before I start looking for work or go on with further study.

    What I want is strictly a side business…sure one day I might want to try turn it into my sole income, but for the foreseeable future I only want to run the business as a side to study and eventually a full-time position (hopefully!).

    What I do is web development, and I’m moving into iPad and iPhone development – over the last year of study I’ve got myself 5 of what I would call “solid” clients who require on going web work – on top of that I also have my own personal websites which bring in a small amount of revenue through advertising. And I’m hoping soon I will have at least one App in the App Store =D

    So my business is comprised of some project/hourly work mixed with passive income from my own projects.

    At the moment I just trade under my own name and I’m not registered for GST…I’m thinking of taking the plunge and setting this up as a proper business…but only a side business, so I have some questions for anybody out there already running what is strictly a side business

    – Do you trade under your own name, or do you have a business name registered? I don’t want to give the impression of a large business behind my business name – I’m quite happy for my clients to know it’s just me – and furthermore that I work from home – if they’re not okay with this then we probably shouldn’t be in business together anyway

    – How do you deal with phone calls and enquiries if you work full time for somebody else? – I imagine this could be a pretty big problem, you want to give your clients the ability to contact you round the clock without getting in the way of your ft job

    – Sort of related to the above – how do you meet clients when you only have the weekend free? Simply meet on the weekend? I know that even some of the clients I have already would only want to meet during business

    – What do you tell your clients about your business? Do they know you also work full time?

    – What about your employer, do you disclose your side business? Is it likely your employer wouldn’t be happy about you “going it alone” and possibly going against them

    – Anything else I haven’t thought of?

    I will be visiting an accountant next month to talk about some of the legalities and semantics – but I think the questions I’ve asked here are best asked to those who actually run their own “side” business – would be very appreciative of any advice that can be sent my way

    #1041636
    Anonymous
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    Hi Teegee

    The questions you’re facing are common ones for start-up businesses, so I’m sure you’ll receive lots of suggestions to help you out.

    Personally, I think you’re in a fortunate position, because you’ve started your business before looking for full-time work. If you make sure anyone you’re looking at taking a job with knows in advance that you’re developing your apps on the side, you’ll have transparency from the get-go.

    Good luck – I’ll look forward to learning what advice you receive on this thread :)
    Jayne

    #1041637
    MattR
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    I have done it so I’ll give some feedback.

    – Do you trade under your own name, or do you have a business name registered? I don’t want to give the impression of a large business behind my business name – I’m quite happy for my clients to know it’s just me – and furthermore that I work from home – if they’re not okay with this then we probably shouldn’t be in business together anyway

    Yes…traded in Own Name, then changed as the business changed (grew).

    – How do you deal with phone calls and enquiries if you work full time for somebody else? – I imagine this could be a pretty big problem, you want to give your clients the ability to contact you round the clock without getting in the way of your ft job

    Its hard…I obviously used mobile phones for quick and direct contact. Generally that meant lunchtime was spent wolfing down food and then calling back clients who had queries. Or straight after work contacting clients along the same grounds. Most people I found were OK as long as you get back to them ASAP , preferrably the same day. Similalry access to your own emails is important for clients who contact you that way. My lunches were very busy!

    – Sort of related to the above – how do you meet clients when you only have the weekend free? Simply meet on the weekend? I know that even some of the clients I have already would only want to meet during business

    I worked four days, so I had some flexibility. Otherwise I’d arrange to meet in the early evenings. I found by offering to attend their home or office, negating their need to travel, stopped most resistance. It does mean sometimes you may not get a client, but that’s the way it goes.

    – What do you tell your clients about your business? Do they know you also work full time?

    Tell them the truth.

    – What about your employer, do you disclose your side business? Is it likely your employer wouldn’t be happy about you “going it alone” and possibly going against them

    Tell them the truth. Some can handle it some can’t. Those that can handle it benefit by getting a switched on employee who knows what they (the employer) is going through. If your employer can handle it, then you must display complete loyalty to them. Always advise them if something comes up that is putting you in a conflict of interest with them. Ultimately you want to go it alone, so its far better doing that with a good referee and potential ally behind you than an enemy who sees you as a dud employee or a sneak etc.

    I actually do a little bit of contract work for one old employer when he gets too busy to handle something complex, and I often liase with another old employer to discuss complex issues and bounce ideas.

    – Anything else I haven’t thought of?

    Get organised, but don’t get analysis paralysis.

    #1041638
    imakeapps
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    Thanks for the advice MattR – can I ask if when you were trading under your own name if you registered it as a business name at all? E.g. “matt r – “?

    One thing I’ve come across is people not wanting to pay into my personal account, so I’ve been thinking of registering my name followed by “web developer” or something along those lines so I can open a bank account in that name and avoid that problem. Also it would be nice to separate my business finances from my personal finances (which as a sole trader kind of are business finances too, but still)

    Cheers for the advice

    #1041639
    HealthyChart
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    Hi teegee,

    Always tell the truth about what you are doing to both clients and potential employers. Explain to an employer how you plan to handle client calls, etc. and they will either be ok with it or not. If you don’t tell them and they find out later, they will never trust you no matter how trustworthy you are or beneficial your side business could be to them.

    I am a sole trader and if I were to use you (and I may want to as I’m looking for an iPhone app developer) I could only use you if you have an ABN. Having a proper business and registering for GST will mean a bit of paperwork, but well worth it in the long run. Even if it is just a side business. Tell the truth and pay your taxes.

    My graphic designer trades under her own name and does her ‘on the side’ work from home. I don’t think your name has to be anything other than your name. I assume most of your business will be word of mouth, so people will know what you do, your scope, etc. And you can always change it later.

    Good luck.
    HealthyChart

    #1041640
    SeaSquared
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    I just wanted to comment on whether you should trade under your own name or a business name. From a purely legal perspective (leaving aside any income tax objectives you wish to achieve), it would be preferable to trade under a company or trust structure so that any liabilities incurred by the business are separate from your personal assets (in a worst case scenario – eg, the business is sued for negligence). If you trade under your own name or under a business name as an individual, there is no distinction between your personal assets and those of the business which means that your personal assets can be used to satisfy any liabilities of the business. If a business operates under a company or trust, the company or trust is treated as separate entity for legal purposes which means that only the assets of the company/trust are available to satisfy the liabilities of the business. (In some cases, a director’s guarantee may be required.) Obviously there are costs in setting up a company or trust and also ongoing costs and you may not wish to incur these. Please note that this does not constitute legal advice.

    #1041641
    Anonymous
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    Hi Teegee,

    There have been some great responses to your questions so far, so I won’t bother repeating most of what has been said already.

    However, if you’re looking for more info about registering and running your business as a sole trader, feel free to check out an article I’ve written about that here.

    #1041642
    donnafrithdesign
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    Hi Teegee

    Congrats on already having steady work from a regular client base! I am a graphic designer, working fulltime Monday – Friday and running my side business on the side. It really works for me as I enjoy being part of a team at my ’employee’ job but also appreciate the different range of projects and client interaction in my own business. It’s certainly do-able, sometimes a bit frustrating at times when you are stretched a bit thin trying to give everything to both jobs, but rewarding too!

    In answer to your questions (sorry I have written an essay in response to yours :) )

    – Do you trade under your own name, or do you have a business name registered?

    I trade under my own name as I like clients to know they are working with just me. It makes it more personal and helps to build my reputation around my name, which is what I want at this stage of my career.

    – How do you deal with phone calls and enquiries if you work full time for somebody else?

    I am fortunate to work in a very flexible work environment where I put in 40 hours a week, however I decide to work them. I can start late and finish late, start early finish early, or do a longer day one day and a shorter one the next. These flexible workplaces exist so when you are looking for a fulltime job keep that in mind. I can easily take phone calls, check my emails etc. I always make sure I’m making up the time, in fact my employer probably still comes out on top!

    – Sort of related to the above – how do you meet clients when you only have the weekend free? Simply meet on the weekend?

    I haven’t had to meet clients face to face that much, phone and email is usually enough. I imagine in web development that could be the same? I have met clients on weekends or for weekday early morning coffees. All my clients know that I hold down a weekday job though so they are understanding about my time schedule.

    – What do you tell your clients about your business? Do they know you also work full time?

    Absolutely, I don’t hide it. In fact I think it’s a positive, it shows a committment and passion for my work that I work fulltime and still want more at the end of the day :) Plus, if you don’t tell them, they’ll start to wonder why you don’t take calls at certain times, and why it takes four days to do a four hour job – you need to disclose your working hours and contact times to efficiently do business with them.

    – What about your employer, do you disclose your side business?

    Again absolutely, particularly as I have the flexibility to take calls etc during the day, I like to keep everything open and transparent. I think again it’s a positive, it’s shows motivation and investment in my skill base. They know I mainly do it for variety in my work and so in a way it keeps me happier in my fulltime job, plus the new skills and experience I pick up running my own business benefits them in the long run.
    I work inhouse and there is no issue of conflicting interests. I have a designer friend who works for a studio and it’s in her contract that she can’t freelance or have her own business in the area. So watch out for that and disclose everything before you commit to anywhere.

    – Anything else I haven’t thought of?

    Just keep in mind there are only 24 hours in a day; only schedule what you can do and go easy on yourself. Don’t over-promise what you can deliver to clients just because you think it’ll look bad to admit you can’t deliver immediately because you have to somehow fit in an 8 hour work day elsewhere. It’s best to be honest and give yourself the time to handle jobs properly. That’s something I’m still learning :)

    #1041643
    DavidThomas
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    Hi teegee,

    I started out as many others, trading as myself using a business name – whilst working full time. I ran into the same problems with bank accounts, and customer perception. Eventually bit the bullet 6 months later and setup a company and haven’t looked back.

    Personally, If you want your side business to become your main business, than setup the company at the beginning (~$500 startup + ~$800/year).
    If not, then go solo – just keep in mind your personal tax will be complex and you should get professional advice to maximise your expenses etc.

    Good luck with it.

    #1041644
    Sh33py
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    teegee, post: 50501 wrote:
    Thanks for the advice MattR – can I ask if when you were trading under your own name if you registered it as a business name at all? E.g. “matt r – “?

    One thing I’ve come across is people not wanting to pay into my personal account, so I’ve been thinking of registering my name followed by “web developer” or something along those lines so I can open a bank account in that name and avoid that problem. Also it would be nice to separate my business finances from my personal finances (which as a sole trader kind of are business finances too, but still)

    Cheers for the advice

    You can start up a pay pal account, free to register but you will find they can take up to 2.4 percent of your earnings. Consider this against banking fee’s and how much you will be charged per transaction if you were to go with a bank. You can set it up with your personal bank account and no one is the wiser as you’re using an email address. I am sure as you area web developer you can implement the paypal into your website, the help section will guide you more in detail.

    Pros: insurance, security, easy to use, less hassle for your customers, legitimizing your appearance, can act as your business account and no head aches setting up the technicalities.
    Cons: up to 2.4% of money transferred is taken (depending on monthly figures), customer must have a paypal account.

    As an eBay seller I find this tool is vital for my customers to pay me quickly and efficiently with no hassles and no fuss.

    Hope this helps.

    #1041645
    Tracey Baird
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    Hi Teegee,

    I risk repeating what others have said but as these forums are all about contribution I’ll add mine too.

    If your business is purely a side business then there will probably be a limit to the type and size of business you can take on and this, ironically will probably work to your advantage.

    Look to niche yourself with a group of clients that will understand that this is a side business. You may be willing to take on smaller assignments given that your time to work on your own business is limited, and this will be seen positively by your clients who will understand your other commitments.

    My other advice is, to consider working part time. Looking for 3-4 days work per week and supplementing this with your own business. This allows you to really work on developing your business and grow it to a point where you could consider cutting your other jobs hours or becoming fully self employed. It’s hard to build a business to the point where it will sustain you if you can’t put your full level of energy in.

    By having your side business accountable to bring in a proportion of your income you’ll also “feel the heat” and work hard to make it profitable – ensuring you don’t undersell your services which is easy to do when you are getting a full salary elsewhere.

    Best of luck – wishing you lots of success with your study, work and business.

    Tracey Baird

    #1041646
    websitedesigner
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    This is all good advice my 3 points would be:

    1. Be honest about your business most people will appreciate it – those that don’t can get over it
    2. Don’t assume people want to deal with a big business and fall into the trap of trying to make your business bigger than it really is. See a recent blog post I made which covers this a bit.
    3. Don’t make anything more complicated than it needs to be. Don’t set up a company unless you want to pay all of your hard earnt profits to an accountant. I set up a company and a trust and it cost me literally thousands of dollars – possibly $10k or more (long story but it wasn’t right for me and the Accountant didn’t think about what was right for me and I didn’t know any better). There is very little tax benefit anymore just limited liability but just don’t be dodgy.
    4. Don’t register for GST unless you have to either, it further complicates things.
    5. Learn how to count – you can see why I’m no good at accounting.

    In general take it slow – any time you are ready to grow bigger the tax office and your accountants will be happy to talk to you :)

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