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Starting a business

What is a solopreneur and how to become one

Deciding to become a self-employed is an incredible moment. While running your own business may come with risks (like many great things in life!), it's the best way to put your passions to work on your own terms. If you're looking to set up a solo business, there are many ways to achieve success.

Here are some tips to help you successfully navigate this new adventure while you launch your enterprise.

What is a solopreneur?

You've probably heard of an entrepreneur—a person who creates and operates their own business. A solopreneur is an entrepreneur who does it all on their own.

There are many small business ideas that are successfully run by solopreneurs—think about house cleaners, tutors, graphic designers, writers, and Etsy sellers. These businesses are sole proprietorships. The solopreneur model is an affordable and straightforward business venture. Being a solopreneur also allows for total independence, which is a big reason why many turn to this business model.

How to become a solopreneur

If you're ready to start a business, there are some crucial steps to take that can help set you up for success:

Step 1: Think through your business model

When thinking of starting a small business, it's ideal to find a niche market or area where your skills or products are needed but not yet available. This will help you differentiate yourself from your competitors.

You should also build a simple business plan so you know exactly where you want to be a year from now. Outline your funding requirements, and go after the capital you need by approaching investors, using your own equity, or considering a loan. You can also consider applying for a small business grant to help you get started.

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Step 2: Familiarize yourself with local regulations

Small businesses in Canada have to pay federal taxes, and in most cases, must also collect and remit goods and services tax (GST) or harmonized sales tax (HST). There are also specific provincial or territorial licensing rules and guidelines you should become familiar with depending on your location. Find your specific regional information by Googling “small business regulations" and your home province or territory.

Step 3: Get a business number

Your business number identifies your business to your customers and the government. It's used in much the same way as your social insurance number.

While solopreneurs can initially operate without a business number, you will need one to access a Canada Revenue Agency (CRA) program account, to collect GST/HST, or if you decide to incorporate.

Smaller businesses earning less than $30,000 in revenue don't have to charge tax, but having a business number is as much about your legitimacy as a business as it is about paying taxes. It's a good idea to register for a business number before you need one for this reason. Clients know your business isn't just a side hobby when you have a business number.

Step 4: Plan for tax time

When you work for an employer, they take care of your tax deductions automatically. But when you work for yourself, that falls on you.

As a solopreneur, you'll have to save for and pay your taxes yourself. A good practice is to put aside around 25 to 30% of your earned income into a separate savings account to cover your self-employment taxes. This does not include your GST/HST payment, which should have its own account where you automatically put the money received aside. You'll also want to lower your tax bill by taking advantage of tax-sheltered accounts like RRSPs and TFSAs, and by claiming expenses.

You can also avoid wrestling with a shoebox full of receipts at tax time by doing your bookkeeping—a simple accounting of income and expenses—monthly. QuickBooks bookkeeping software will help keep you on track.

If you file your taxes yourself, you'll need to fill out a T1 General form, along with a T-2125 Statement of Business or Professional Activities. If you collect GST/HST, you'll need to submit a separate return—but accounting software like QuickBooks will walk you through the process, helping to make filing your small business taxes simple.

Step 5: Set up your business operations

When starting a business, it's easy to overlook day-to-day administrative tasks, but they are crucial to success.

To stay on top of things, create an invoice template that includes your business number and payment terms, including any penalties for late payments. You should also determine where and how you want to bank. While a business bank account isn't mandatory, separating your personal and business finances will make your life easier. To keep work expenses separate from personal ones, you can also consider using a business credit card.

Finally, don't forget to set up a website and Google Business profile so your customers can find you online.

Step 6: Attract clients

Finding your audience is the final step, but it's also the most important. You need to attract loyal customers to run a successful business.

There are many ways to market your services—you can try traditional mailers and Google ads to reach a variety of demographics. But the easiest way to begin is with your inner circle. Ask family and friends for feedback on your elevator pitch, and see if they know anyone looking for the product or services you provide. Word-of-mouth recommendations are the fastest way to build a base of reliable clients and customers.

Once you've pursued those leads, it's time to brush up on your networking skills. Go to conferences and join professional organizations. Get active online and on social media, especially in forums relevant to your business. Consider writing guest blogs to introduce your services to new audiences while building SEO power.

Last but not least, ask happy clients to review you. Reviews can give your business extra credibility, as new customers are more likely to trust a business that others already trust.

There's a lot to think about when you set up a business. Self-employed and solopreneurs may go it alone, but the journey shouldn't feel lonely. Add QuickBooks Online to your team to help you track income and expenses, identify deductions, and file your returns. Learn more and start tracking your small business expenses with QuickBooks today!

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