Building Your Business

    For entrepreneurs, sole proprietors, and small business owners, it’s important to know how business decisions can impact your personal finances and vice versa. Here are the basics, resources, tips, and strategies to help you navigate small business ownership.

    Frequently Asked Questions

    • What is an example of a sole proprietorship?

      A self-employed business owner and independent contractors are examples of sole proprietors. Many self-employed business owners also work from their homes to complete jobs for clients. For example, a freelance graphic designer, freelance writer, or an IT consultant who works with several clients could be considered self-employed business owners.

    • What types of taxes do small businesses pay?

      Sole proprietorships, partnerships, LLCs, and S-corps use the pass-through method, wherein profits and losses are reported on the business owner’s and shareholders’ personal tax returns. Depending on business structure, tax liabilities that small businesses must account for include income tax, self-employment tax, employer tax, excise tax, and estimated tax.

    • How do I start a business from home?

      There are several steps to start a home business, beginning with finding a relevant, viable business idea, then outlining a business plan so you can arrange funding and manage day-to-day operations. Most importantly, however, you should decide on a business structure—like a sole proprietorship or LLC—for tax purposes, and then legally register your company with a state or local government.

    • How do small businesses get financing?

      There are several ways to obtain financing for your startup or small business including bootstrapping (using personal assets and no investors), borrowing from family or friends, using personal or business credit cards, applying for SBA 7(a) or microloans, crowdfunding, finding angel investors, and debt or equity financing.

    • How do I create an invoice?

      There are several free invoice templates you can use to request payment for a product or service. Some factors to consider when invoicing include billing preferences, the type of clients you work with, and the goods or services provided. In an invoice, you should include business and client details, description of service, dates, amount owed, payment details, and terms.

    Key Terms

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