Startup Costs for Creative Businesses
Article by Venessa Baez | December 8, 2017
Before you dive headfirst into the world of business-ing, it’s important you do your research and prepare to budget for the startup costs you’ll learn to expect
Being a graphic designer means that you’ve likely done freelance work at one point or another.
I think the same can be said for anybody who can be labeled as a “creative”. If you are one of these people, you may have said to yourself, dagnabbit I want to make more money with this side-hustle and make it a full-time thing!
So it sounds like you need to start your own business. A legit-honest-to-goodness business with its own fancy-schmancy website and a business checking account to match.
Unfortunately to make money, you may have to spend a little first. Startup costs for a creative biz are pretty similar to starting up any business. Luckily you don’t have to worry about overhead or office space if you’re planning on starting out working from home before expanding.
Before you dive headfirst into the world of business-ing, it’s important you do your research and prepare to budget for the startup costs you’ll learn to expect. But budgeting can make the whole experience a lot less and a whole lot easier.
1) Choosing a business name
If you’re forming an LLC (more on this in the next step), you do have to choose a business name to operate under. I chose to use Baez Creative Company because it used my last name but also wasn’t so defining that I wouldn’t have wiggle room if I chose to change the company’s direction in the future.
You may also want to consider registering a “doing business as” name or a fictitious name if you’ll be operating under a different business name.
You’ll also need to make sure your name isn’t already copyrighted. Check for trademarks, copyrights, domain names, social media accounts – anything that could conflict any future branding plans you may have. Being proactive about picking a name you can use legally could save you a lot of trouble and money in the future.
2) Forming a limited liability company
Before you form a limited liability company (LLC), make sure you research the laws and costs in your state, and maybe even speak to a tax professional to find out if it’s the right decision for you.
After doing my own research, I chose to form Baez Creative Company as an LLC. One of the main reasons was so that if I chose to bring on a partner in the future, the groundwork would already be there to expand.
In the state of Florida, forming an LLC is fairly easy through the sunbiz.org. You could do what I did and walk through the steps yourself, or you can go through a company that charges a small free on top of your state-fees to do it for you.
3) Filing for your EIN
Even if you are the sole designer working at your firm, you will still need an employer identification number (EIN). As I mentioned above, some companies will file your LLC paperwork for a small fee. However, some of these companies may also charge to apply for your EIN from the IRS.
If you file for your EIN yourself, it is completely free through the IRS website, and you don’t even have to pick up the phone. If you have ten minutes to spare, you can save yourself some cash. Just make sure your LLC has been approved first.
4) Open a business checking account
Depending on where you choose to open your business checking account, you’ll need to make an opening deposit. When you choose how much to put in your account, think about what your expenses will be for the next year.
Take a look around your local credit unions and banks for the best rates you can find. You’ll definitely want to keep your personal and business funds separated.
5) Get your website up and running: purchase a domain and hosting
An average domain will run you one dollar for the first year or anywhere upwards of $30 a year if you opt for privacy. Some options like Google Domain come with free privacy, and some like GoDaddy will charge for this feature.
Even if you don’t plan on launching a website right away, it’s a wise decision to purchase your domain name as soon as you can before someone else may claim it.
You may choose to use a prebuilt website through somewhere like Squarespace or Wix. Or you can have a custom website designed and developed for your needs. The only downside of having a custom website is that you’ll need to have your own hosting, which can have an annual fee attached. But being able to own the code and content of your website is worth it in the long run.
6) Setting up recurring bills that relate to your business
If you’re planning on working from a home office, you won’t have as many bills to worry about if you were opening a more traditional retail business, like a store or a restaurant.
Some common bills for graphic designers include:
- Adobe Creative Cloud
- Stock image subscriptions like Envato Elements
- Royalty-free video/music subscriptions like Epidemic Sound
Your subscription fees may vary, but make sure you get them under the roof of your business checking account if you are using them for your business. They will need to be claimed as business expenses when the time comes to do your taxes.
And speaking of taxes…
7) Getting an accountant
Your cost will vary on this. Meeting with an actual Certified Public Accountant who knows your state laws and local laws will help save you a ton of money in the long run. You may also consider investing in something like Freshbooks to keep track of your expenses in the meantime.
8) Printing your official business cards
Getting your official business cards are like a final stamp of completion on getting your business up and running. You can print at home, or if you want a more professional look and to support other local businesses, choose a local print shop.
Wait until everything else is set up before you purchase the business cards, and don’t forget – these are also a business expense. Congratulations on a job well done.
Note: Everyone’s experience and business requirements or startup costs will be different. These are the steps I took when starting Baez Creative Co.