Those who dream of owning their own small business know that launching a startup requires dedication, risk, and a sacrifice of personal time. Oftentimes, entrepreneurs work nights and weekends to start their new businesses, while depending on their day jobs for health benefits and a steady income. Before starting a business while working, new entrepreneurs should consider the following tips to separate their work lives.
1. Consider Conflicts of Interest
Many companies require employees to sign noncompete agreements or include similar language in employment contracts. These restrictions prevent employees from working for a competitor or opening a competing business. Some companies also require their employees to report secondary sources of income. Prior to launching your side business, review your employment contracts and speak with someone in human resources at your day job to make sure you are cleared to begin.
2. Separate Your New Business and Day Job
Separation is key when distinguishing your day job from your new business. To avoid unwanted association with your day job, remove your personal identification — such as your last name — from your new company's branding. To further compartmentalize your work lives, open a separate email address and bank account. This will allow you to better track your communications and funds directly associated with your new business.
3. Plan for Tax Season
The income and related expenses of your side business may not be large for the first few years. At some point, tax planning may become a necessity. If your new business makes enough money to send you into a higher tax bracket, your current payroll withholding may fall short at tax time. It's important to consult a tax professional about increasing your withholdings or setting aside income to pay estimated taxes. To further organize yourself for tax season, consider an online accounting system to save you time when keeping track of your newly incoming finances.
4. Find the Time
Finding the time to devote to a new business without faltering on your 9-to-5 responsibilities might be the biggest challenge for entrepreneurs. Set aside a designated time to focus on your new endeavor, and research the logistics of opening a new company before launching. This will help you avoid the hassles and mistakes that can accompany the learn-as-you-go mentality.
5. Have a Long-Term Plan
As a new entrepreneur, it's crucial to know your long-term goals and have a plan for if, and when, your new business takes off. Maintaining two full-time jobs is not a sustainable solution, so either plan to hire help or gradually transition away from your current full-time job.
Entrepreneurs choose to start their own side business for many reasons, including: to increase their income, to follow their passion, or to aim for self-employment when their current industry is uncertain. For those with unquenchable entrepreneurial spirit and the right amount of motivation, it’s possible to successfully start a business while working full-time.