A simple how-to guide for starting your business

On this episode of Getting Rich, go on a financial journey with Carmen Perez as she outlines the pro tips and tricks to own your bank account, from credit scores to crushing student loan debt.

Starting your own business takes lots of hard work and dedication, but the process of getting it up and running is actually simpler than you might imagine! If you have big dreams of running your own small business, Carmen Perez (@makerealcents) of Make Real Cents is here to help.

In this episode of Getting Rich, Carmen walks viewers through the logistics of setting up their first business, then sits down with small business owner Jennifer Nuñez (@lightmaintenancecandles) to talk about how she can grow her business. 

The first thing to do, according to Carmen, is decide what kind of business to start. There are 3 main types of businesses you might want to consider launching: a sole proprietorship, a general partnership, or a limited liability company. The kind of company you choose depends on your needs and the kind of company you plan to run.

“A sole proprietorship is the most common and simplest form of a business structure. It’s perfect for one person because that means only one person is liable for the business,” Carmen explains. “A general partnership is pretty similar to a sole proprietorship, only the business is now between two or more people. The main difference is that the liability will now be shared by everyone.”

A limited liability company, meanwhile, protects business owners from certain personal responsibilities. “A limited liability company, or an LLC, is a business structure that protects the owners from personal responsibility for deaths or liabilities,” Carmen explains. “An LLC is a nice way to keep the informal business structures of a sole proprietorship or general partnership with some added protection.”

Once you’ve decided on the type of business you plan to launch, it’s time to familiarize yourself with the important forms you’ll have to fill out. Carmen recommends starting by registering your business name, or at least, purchasing a domain name and starting your social media accounts. 

Then, it’s time to apply for an employer identification number, Carmen advises. “If you’re anything other than a sole proprietorship, you’ll need to apply for an employer identification number, better known as an EIN,” she explains. “This is like the social security number for your business, so you can’t file your taxes without it.”

Carmen also recommends opening a separate bank account for your business. “Even if you’re a sole proprietorship, having a separate bank account and credit card for your business is key to separating work from life,” she notes. 

Next, Carmen sits down with Jennifer Nuñez, the founder and CEO of Light Maintenance Candle Co. Jennifer launched her business in 2020, and is looking for advice on how to grow it. “When I heard about Getting Rich, I said, ‘You know what? This is the perfect opportunity to just learn more,’” she tells Carmen. 

Carmen gives Jennifer two main pieces of advice. First, she recommends that Jennifer grow her brand on social media. “If you’re starting to build your social media brand, that’s something that you can definitely lean into,” Carmen tells Jennifer. “Educating people is a great way to start building community and building brand awareness.”

Second, Carmen reminds Jennifer of the importance of keeping her personal and business expenses separate. “I think it would be important for you to be able to separate those business and personal expenses, so at tax time you are all set,” she explains.

Finally, Carmen concludes the episode by giving a few hot tips. She advises viewers not to worry too much about their business name because they can always change it, then reminds viewers to utilize free marketing resources like Facebook, Instagram, and YouTube. And, last but not least, she reminds viewers to put some thought into the differences between their business and personal expenses. 

“Before you file your first form, it’s a good idea to map out what counts as a business expense and what counts as a personal one,” Carmen explains. “Your small business can creep into your life as your network grows, so it’s always good to make sure you understand the difference between a personal expense and a business expense.”

Carmen is not a registered investment advisor. The above information is not investment advice and is intended for educational purposes only. Please consult with a financial professional to assess what investments are suitable for you based on your financial objectives, needs, and risk tolerance.

More from In The Know:

13 bizarre Amazon cooking tools actually worth the splurge

These popular Nordstrom leggings are now less than $5

This $8 oil is my favorite natural beauty secret — and 55,000 Amazon shoppers and dermatologists agree

The best deals under $50 to shop at Nordstrom Rack this weekend — but they definitely won't last long!

Listen to the latest episode of our pop culture podcast, We Should Talk: