API Home Service Repair Businesses

Setting up a Small Business

There’s many ways to set up a new business. Knowing and understanding what steps are needed will help you to be more successful.

Lets start at ground level, to make sure you get your planning off on the right foot.

You have your name and home service industry mapped out but have you checked to see if the name is already trademarked? Did you check to see if your company name is available? Are you going to register the company as an LLC, DBA or an S Corporation?

Before you set your service pricing, you need to know your costs. There are fixed overhead expenses, such as rent which remain consistent each month. Than you have variable expenses which depend on the direct sale of products sold or services performed. There are also variable costs that you can control such as credit card processing fees. 

There are tools to help you understand these costs and ways to save on them plus so much more.

Determining what kind of company to set up – LLC, DBA or an S Corporation.

Do you have partners or starting the business by yourself; either way forming an LLC will insure sure you’re personally off the hook for business liabilities.

LLC Upside

  • Max flexibility to manage and run your business
  • Board of directors not required
  • Unlimited owners allowed

Protections & taxation

  • You’re not personally on the hook for business liabilities
  • Taxed once or twice; you’re free to choose which can help minimize taxes


  • Ongoing fees and filings to stay in compliance
  • Cannot go public with a LLCs
  • Not recognized globally and you may be taxed as a corporation outside the US


DBA stands for “doing business as” is a way of giving a business a name different from its registered name. While it doesn’t provide the protections other legal business entities do, a unique DBA name can help brand your company.


  • East to set up

Protections & taxation

  • You’re personally on the hook for business liabilities
  • Taxed just once if your business is classified as a sole proprietorship or partnership—you pay on profits in your personal tax return


  • No personal liability protection
  • Not an actual legal entity type


Corporation either S or C corp are recommended if you plan to issue shares, go public or even go global.


  • Best if you plan to go public one day; can issue shares to founders, employees, and investors
  • Unlimited owners/shareholders allowed
  • Owners may get preferred stock
  • Recognized internationally
  • Preferred by investors
  • Protections & taxation
  • You’re not personally responsible for business liabilities
  • Taxed twice if it’s a C corporation—business pays at the corporate level and shareholders pay on income they receive
  • Avoids double taxation if it’s an S corporation

Drawbacks to consider

  • Ongoing filings and fees to stay in compliance
  • Less management flexibility
  • Requires a board of directors
  • Strict rules about holding meetings and record keeping

Calculating the cost of starting a business

A business plan is the best way to estimate your business startup costs. The plan should include a financial projections section to estimate revenue, profit and expenses.

Different types of expense to plan for

Before you can accurately price service, you need to know your costs to provide it. It is recommended to find calculator to help you understand the costs. Here is a link to a free small business set up calculator to help get you started.

Using tools like this is only as accurate as your inputs. When in doubt err on the high side because unexpected costs may arise.  The totals from this calculator can provide a general idea of what you need to account for, at a minimum.

One-time costs vs. ongoing costs

One-time expenses are very relevant with the startup process. You have legal expenses for trademarking and incorporating a company. You also have a one-time equipment purchase. Don’t be surprised if your money going out is greater than the money coming in. Cash flow will be disrupted that month so plan ahead to make up for it in subsequent months.

Ongoing costs are different. They are paid on a regular basis and include utilities. They generally do not fluctuate month to month.

Fixed costs vs. variable costs

Fixed expenses like insurance or monthly rent are consistent from month to month. Variable expenses depend on the direct sale of products or services.

Processing rates are a variable cost that you can control; this is why it is crucial to compare credit card processing providers before you sign up.

No business can afford surprises at the end of the month. Look at processing apps like iWallet for transparent credit card processing. They offer two flat rate tiers, a low one for companies under one million and even lower for businesses that process over one million.

For budget planning, determining the exact amount to allocate toward business taxes which is difficult to predict because it depends on your revenue, deductible expenses, and your business entity.

Typical startup expenses

Here’s a very short list of typical costs to start businesses should plan for.

  • Web design, development and hosting
  • Office/warehouse rental cost
  • Office furniture
  • Transportation fleet
  • Labor
  • Office supplies
  • Equipment
  • Technology
  • Insurance, license or permit fees

Advertising or promotions

Cash flow projection

An essential step to maintaining your business’s long term financial health starts with projection planning of cash flow. You must be realistic about your cash flow and debt to successfully get your business off the ground. Most new business owners make a projection plan for their cash flows that are the first three months of the business. To do this, add up the fixed costs and the estimated costs of goods.

To sum it up

Experts say it is smart to have a financial cushion to cover six months’ worth of expenses upfront to help support you in the early stages when profit margins may be small.

Planning an accurate business budget can be a nerve-racking part of starting a new home service business. Being as accurate as possible about estimating the business startup costs will help get your company up and running smoothly.

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