Content of the material
- Cookies on GOV.UK
- 97. Event and Party Planning
- Any event (with the right client) can use a helping hand from a detail-oriented person.
- Get Financing in Place Beforehand
- 2. Build a business plan
- Get a Tax Registration Certificate
- Skipping This Requirement
- Selling goods or services
- 2. Choosing and registering a business name: Hint, it’s about licenses
- Market Your Business
- Pay Estimated Income and Self-Employment Taxes
- Skipping This Requirement
- How to Register With the IRS as an Independent Contractor
- 4. Build your reputation
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97. Event and Party Planning
Any event (with the right client) can use a helping hand from a detail-oriented person
Being a wedding specialist works well for top-notch players, but being a generalist also has its benefits. Event and party planners leverage their network of service providers to cover not only weddings, but also seminars, corporate events, birthdays, baptisms, concerts, conferences, holiday parties, and other events, making it a relatively diverse business idea. Here are some tips if you want to run a part-time event planning business at home as one of our more fun side business ideas. And here’s a very honest look into the upside and downside of the trade. As a quick aside to this idea, if you want to build a digital business around event planning too, blogging can be a great start—grab my free blog planner bundle and get inspiration today.
Get Financing in Place Beforehand
How much capital (if any) will you need for business premises, machinery, equipment, etc.? Capital financing may not be an issue for a computer consultant who can start a home-based consulting business with only a laptop and mobile phone, but starting an excavating business, for instance, may require hundreds of thousands of dollars in equipment.
In addition to capital financing, you will need to cover business and personal expenses until your business generates income, Even if you already have clients when you start the business, it may be months before you get paid for the completion of your first project.
Before you make the move to become a contractor, perform a complete review of your finances and estimate your needs as closely as possible, then (if needed) consider possible sources of financing, such as family, friends, or business loans from financial institutions (spoiler alert — it is virtually impossible to get financing for a new business from a bank unless you have sufficient collateral in the form of personal assets).
If financing is required and you intend to seek loans or capital investment from equity investors, then you will need to have a comprehensive outline of your financial requirements as part of your business plan.
2. Build a business plan
While some may be able to easily transition from full-time employment to being a full-time contractor with clients in place, others will need to build out a more concrete business plan to ensure success. Even if the transition looks like it will be simple, it can be helpful to create a plan that includes market research, marketing strategy, financial considerations and projections, growth forecasting, and metrics for measuring success.
A business plan is a blueprint for success and can help you keep tabs on how your self-employed business is performing over time. It can also be updated over time so that, as you grow, you can set new goals, predictions, projections, and strategies for the business to ensure optimum performance.
Get a Tax Registration Certificate
Many cities and counties require every business — even single-owner, home-based operations — to register with the local tax collector and obtain a tax registration certificate. This certificate is sometimes called a business license, but it is essentially a receipt for the tax you must pay for the privilege of doing business in a city, and nothing more.
If you operate your business out of your home, you usually need to get a tax registration certificate in the city where you live, even if none of your clients are in that city. Contact your city clerk for an application.
Skipping This Requirement
Some independent contractors fail to register, figuring they can stay under the local government’s radar. But consider this: Tax registration certificates are inexpensive, while the penalties for operating without a license can be hundreds of dollars. In addition, in some locales it is a misdemeanor to violate city ordinances by operating without a tax registration certificate.
Selling goods or services
You could be classed as a trader if you sell goods or services. If you’re trading, you’re self-employed.
You’re likely to be trading if you:
- sell regularly to make a profit
- make items to sell for profit
- sell items on a regular basis, either online, at car boot sales or through classified adverts
- earn commission from selling goods for other people
- are paid for a service you provide
If you only occasionally sell items or rent out property (for example through auction websites or short-term rental apps), check if you need to tell HMRC about this income.
Contact HMRC for advice if you’re not sure whether you’re trading.
2. Choosing and registering a business name: Hint, it’s about licenses
Similar to self-employed, registering a business means different things to different people. If you talk to a marketing guru, registering a business might mean trademarking your business name and killer logo. If you talk to a CFO, registering might mean filing your articles of incorporation to make sure ownership stakes are all legally taken care of.
Before jumping into intellectual property and shareholder rights, consider the narrow set of circumstances when a certain type of registration might be required to operate your business, even if you are self-employed.
If you’re a professional business as defined by the SBA, you may need additional licenses or permits. Depending on where you do business, you may need location-specific licenses or permits. Beyond that, your business type and size may require a different type of registration. Let’s take a closer look.
Market Your Business
When starting a new consulting business, the major challenge is usually getting the first few paying customers. If you have transitioned from a full-time job in the same profession, you may have potential clients already. If not, you should reach out to friends, family, and business contacts prior to opening your doors. Advance word-of-mouth can help you gain clients much more quickly, in addition to getting feedback about the potential of your business idea.
If you have to start from scratch, put together a marketing plan and implement some simple, inexpensive marketing strategies (such as a social media plan) to get your first clients.
Pay Estimated Income and Self-Employment Taxes
Unlike employees, who have income taxes and other taxes (Social Security and Medicare taxes) withheld from their paychecks, independent contractors have to handle all of their own taxes. This means you have to set aside enough money to pay your tax bill each year. All independent contractors who make more than $400 per year from business activities must report their business income to the IRS. For general information on paying taxes as a self-employed business owner, see How Sole Proprietors Are Taxed.
In addition, if your business is at all profitable, the IRS requires you to pay your taxes in four installments during the year, called paying “estimated taxes.” (If you will bring in more than $3,000 in adjusted gross income from business activities in any year, plan on paying estimated taxes.) For more information on estimated taxes, see Paying Estimated Taxes.
Skipping This Requirement
If you have a day job, you can avoid making estimated tax payments by asking your employer to increase the income withheld from your paycheck to offset the taxes that will be due on your business income.
Some small-time independent contractors skip paying taxes on their freelancing or consulting income altogether. But before you consider hiding income from the IRS, you should know that penalties and interest on back taxes, especially self-employment taxes, can be quite high. Also, any client who pays you more than $600 by check or cash in any calendar year must report the income paid to you to the IRS, and the IRS will check your tax returns to see whether you are reporting this income.
It’s better to bite the bullet and just pay taxes on your business income. By being clever about deducting your expenses, you may not end up paying taxes on much income at all — independent contractors can deduct many more expenses than employees, often lowering their income by as much as 50% for tax purposes. In addition, sometimes your business activities can produce a tax loss that can reduce your taxable income from other work. For more information, see Operating Losses: Prove Your Hobby Is a Business.
How to Register With the IRS as an Independent Contractor
To set yourself up as a self-employed taxpayer with the IRS, you simply start paying estimated taxes (on Form 1040-ES, Estimated Tax for Individuals) and file Schedule C, Profit or Loss From Business, and Schedule SE, Self-Employment Tax, with your Form 1040 tax return each April. You can get these forms from the IRS website at www.irs.gov.
4. Build your reputation
In addition to marketing your business to prospective clients, you’ll also want to focus on keeping current or existing clients happy. This means developing a set of best practices and principles by which you do business. Ensuring your current clientele remains satisfied will not only help you retain those customers but could also lead to strong referrals.
There are key principles that the best self-employed business owners live by, which include:
- Creating a reputation built on integrity and honesty
- Owning up to any mistakes or missteps
- Providing customized attention to each customer and remaining in close contact to address any questions or issues early and often
- Under-promising and over-delivering
You may even want to consider listing your core business values on your website to let people know how you operate and to instill trust that you are a person of integrity.
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