Solopreneurship 101: A Quick Intro to Running a One-Person Business

If you want to get started with your one-person business, you might not be sure where to start. Here is a super quick introduction to what it takes to become a solopreneur.

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I’m still not sure how I feel about these made-up words like solopreneur, but they seem to be common so I’m doing my best to embrace them. I think the word entrepreneur has been overused to the point it hass lost its original meaning. Everyone is some kind of preneur these days. But I get the sentiment and this episode isn’t to challenge what’s appropriate in the preneur space. It’s about what it takes to be a solopreneur, or a single person business.

The most common comment I get in my business sessions is “I don’t know what I don’t know.” It’s coming from people who are wanting to start their businesses but aren’t quite sure where to start. They often already have full-time job jobs and would like to leave them but how do you know when it’s the right time? If it’s the right decision? How do they know they won’t mess it up and regret the decision?

The thing is, there never really is a “right” time. It’s all about choices and how hard you’re willing to work to make it work, if self-employment is actually what you want. It’s good to arm yourself with information, but not to overwhelm yourself so much you get stuck and don’t make any progress at all.

To me, the biggest thing to keep in mind is that, no matter what service or product you’ll be providing, you will be running a business. You have to stay in that mindset. Even if you don’t consider yourself to be a “business-y” person, there are certain things you’re going to have to do. So here is a quick Intro to Solopreneurship.

First, form your business. Pick a name, get your licenses, define your services, and start offering them. Don’t spend too much time worrying about whether you need an LLC or not. You will not find the answer by Googling because it depends on a lot of personal factors. So if you want to save a lot of time and confusion, discuss it with your accountant to see if it’s the right choice for you. Otherwise, you can start as a sole proprietor and change it later if it makes sense.

Second, set up your accounts. As soon as possible, you want to open separate bank accounts so you aren’t mixing your business and personal funds. It’s a huge red flag to the IRS if you don’t have that separation and can hurt you when it comes to business deductions. All business income should go into those accounts and all business expenses should come out of those accounts. It doesn’t mean you can’t transfer your money to or from your personal accounts as needed, but you need to show that paper trail of it flowing through the business account first.

If you end up setting up or filing as an S Corp, keep in mind that how you withdraw money is going to be different than if you’re a sole proprietor or single member LLC, so make sure to discuss that with your accountant in that case.

After you’ve done those two things, you’re running a business. Congratulations!

So then what? Now you get to work. And as a single-person business, that means you’re wearing a lot of hats, so it becomes a balancing act of getting all the things done. It can feel like a lot in the beginning, but you’ll get in a rhythm as you go. You’ll figure out your systems, how to make the most of your time, and which things are worth outsourcing so you don’t have to deal with them.

One of the most important, and most people’s least favorite hats, is the bookkeeper hat. You can’t get around it. You’re going to make and spend money and there’s this lovely agency called the IRS that needs to know about it. It’s so important to stay on top of your money. Not just for taxes but for your own decision-making, too. I’ve talked about this a lot and