As I’ve been making my way in the realm of the self employed, I’ve had cause to stop and consider the different ways and means by which people make a living. Just the other day, I made an interesting obvervation concerning how the generational view on employment has seemed to change. When discussing what someone’s family member does as their vocation, this seems to be the general breakdown of how it’s viewed:

“The Greatest Generation” – those who grew up in the depression and were young adults during WWII. My grandparents. They tend to be focused on the company that one works for. “Yes, he works for Boeing.” Only when their family member is self employed are they forced to consistently explain what role the person plays. “He’s self employed. He works on computers.”

The Baby Boomers. This is my parents’ generation. They seem to focus on a job title. “Our son is a Systems Administrator.” The focus is less on the company, likely because during my parents’ generation it was becoming less and less likely that a person would work for the same company for their entire life.

Millenials, AKA Generation Y. This is my generation, myself having been born in the poster year for Gen Y: 1982. When asked about our vocation, we seem to have two parallel thoughts. The first is that we don’t seem to see our work as separate from the rest of our life. We have had the fortune to build on the hard work of previous generations to be able to freely choose a vocation that we love and feel called to. “What do you do?” has a larger meaning to us than it seems to have for prior generations. The second thought is that we define what we do not by the company we work for, or the job title we’ve been given, but by a job or project description. “I work on the computer systems that allows a business to function competitively.” We also tend to inject our sense of “calling” into the description. I only just now realized that that’s probably why I’ve lately been changing the way I describe my work: “I make companies happy about the technology that runs their business.” That’s vastly more touchy-feely than my grandparents’ generation commonly expressed their vocation, and yet it’s effortless and natural for me.

I’m sure that I’m not the only one to make these observation. I’m certain that there’s plenty of scientific and pop-science writings on it. I’m just not terribly familiar with it personally. Have you noticed a similar thing? Either way, which culture do you come from? I’m sure this is a different experience in different countries around the world. What is your generation and how do you explain your work to others?

(March 2011 Update: I’ve added 11 more to the raw list of possible tools to use for time tracking. These tools range from barebones time tracking to also including tons of other features including invoicing. Some are apps that you install, some are web based. This is merely a raw list and not a review of the tools.)

(April 2011 Update: A few more tools have been added that can track time, however these are more project management tools that also allow for time tracking. They’re not strict time tracking tools.)

Doing more independent contracting has caused me to need an elegant way of tracking my time usage for various clients and projects. I sent out a tweet requesting to learn how other independent contractors track their time for clients and received quite a bit of feedback. One of them included just using a simple Excel spreadsheet. That was actually encouraging to know that clients can be accepting of a simple spreadsheet and that I don’t necessarily have to “wow” them with pretty graphs and charts as well as offering 14 different ways to analyze my time.

Nonetheless, I think that it would be useful to have a range of metrics that can be analyzed as well as the opportunity to present the aforementioned pretty graphs. I’m not against eye candy if there’s at least some legitimate meaning to it. Making it easier for a client to see just what I’m doing for the money they pay me is certainly an added value.

I’ve collated the list of web based time tracking tools (some also have fat clients for PCs and phones) that many of my Twitter followers graciously suggested to me. I was hoping to write a full article about some of my findings on them, but I noticed that many of my online colleagues are also stepping out on their own into the indie contracting realm and were looking for these kinds of tools. As a result, I’m expediting things by simply dumping my current list of possibilities out for the benefit of those who may be looking for similar resources. A more thorough dissertation on one or more tools may be forthcoming.

• Let’s Freckle (Seriously, what’s up with that name? Suggested by @weareanalog)
• Fresh Books (As suggested and used by @rayners)
• Market Circle’s Billings Pro for the iPhone (Suggested and used by @Xuff)
• Get Harvest (Time tracking and invoicing tool. Suggested by @danielwanja)
• 1 Day Later (Suggested by @martiell)
• Toggl (Suggested by @coachproellen)
• Yanomo (Suggested by @YanomoApp)
• Liquid Planner (Suggested by @bdha)
• Mr. Tick Tock (Updated March 18 2011: Suggested by Jack in the comments below)
• FreedCamp (Updated March 18 2011: Suggested by Tadd in the comments below)
• Teamlab (Updated March 18 2011: Suggested by Tadd again)
• Clocking IT (Updated March 18 2011: Tadd again!)
• Project Hamster (Updated March 23, 2011)
• Invoicera (Updated March 23, 2011)
• Time Doctor (Updated March 23, 2011)
• TickSpot (Updated March 23, 2011 – Recommended by @kit_plummer)
• Paymo (Updated March 23, 2011)
• kTimeTracker (Updated March 23, 2011)
• Slife (Updated March 23, 2011)
• My Client Spot (Updated April 18, 2011)
• Desk Away (Updated April 18, 2011)
• Base Camp (Updated April 18, 2011)
• Time Camp (Updated April 28, 2011)

Did I overlook any other services worth mentioning? Let me know in the comments.

Way back in March, I asked some of my Tweeps for advice on how they kept track of their time to be able to bill clients. From that and some of my own research I was able to make a decent list of potential time tracking tools to use as I forge ahead with independent contracting.

For my own business, I use QuickBooks 2010 Professional to keep track of finances. I’d like to keep as much financial information within that system as possible. I shudder to think of a sprawling web of financial information strung across multiple local and “cloud” systems. That means I want to keep invoicing within QuickBooks unless there are some very compelling reasons to use another service. And by “very compelling reasons” I mean “using QuickBooks invoicing will cause non-trivial regions of my body to burst into flames before rocketing off and shattering into tiny pieces against the wall.” Nothing less than that seems to be convincing enough. As a result, any tool that I use needs to make it easy for time sheets to be translated into invoices in QuickBooks.

Also coming into play with my decision is the fact that I’m something of a task management wonk. I like to have neat task lists, wikis and document stores for each of my projects and clients (whether or not I actually keep those task lists up-to-date is another blog post entirely). It would be very advantageous if the time tracking tool had some kind of a relationship with a project management tool. It’s one thing to say “I worked on your stuff for four hours today. Here’s my time sheet, see?” and another thing to say “Here’s a task-based breakdown of what I accomplished in these four hours I’m billing you for.” I tend to send customers a monthly or weekly update email with all of the things that I’ve done for them in that time period and I loathe to think I’ll need to knit together information from two separate systems (task management and time tracking) to make an appealing account of my time.

Of course, the time tracking needs to be attractive too. I’m something of a visual person and can definitely appreciate a tool that’s been designed with aesthetics in mind. As a business owner, I also appreciate that my business’s image is affected by every interaction with customers. For this reason I strive to make my business cards, pens, invoices and even time tracking statements look as neat and appealing as possible. That doesn’t mean things need to look like an army of Pratt Institute graduates worked on it. The function of a thing must come first, but comeliness cannot be lightly treated. Which brings me to my next point.

Utility. The time tracker must be able to easily handle multiple clients, projects within those clients, contacts within those clients and projects as well as make granular breakdowns of how time is spent. This is closely related to the desire for close project management integration above as many of these features could be blended with a PM tool. I need to be able to make different hourly rates for different clients and projects as well as being able to easily handle retainer time. I’d like the ability for clients to log in and see what progress has been made on certain projects or how much my time is being spent on which things. Being new to the realm of contracting, I’m not even sure what features to look for, but I’m sure I’ll get some good ideas as I go. I’m also hoping that a clear front runner will show itself as I ask it do to more and it magically rises to the demand.

Furthermore, it would be great if the service itself could actually track the time. I don’t just mean me typing in how many hours I’ve worked. I’d like the ability to actually click “start” and “stop” on a timer, or select some kind of alarm or have other features that actually help me track the time.

Let me collect the above wishes into a list and add a few other little things:

• Some form of integration with QuickBooks to make invoices from time sheets, even if it’s well formed CSV exports of time tracking data. (non-negotiable)
• Integration with some task management tool like BaseCamp or LiquidPlanner (non-negotiable)
• Attractive presentation of time with at least some level of reporting possible (non-negotiable, although I understand that this is a subjective category that I’ve intentionally left broad and undefined)
• An option for clients to log into their projects and see the time that I’m spending on them. (Optional. I’m not sure I like the idea of giving clients the ability to look over my shoulder like that, but it might be nice to at least have that option present.)
• Web based (Optional, but strongly preferred. This is something I didn’t touch on in the body of the post, but it would be preferable if this was done via a web application since I work on many different PCs and phones across different OSs)
• Mobile application support. (Optional. I’d like to be able to interact with the time tracking tool including starting to track my time via my iPhone and perhaps a future Android. Heck, at that point I’d start tracking my personal time to see how much is consumed by Team Fortress 2 and how little I spend on reading these days.)
• An actual time clock to track time an not just a tool to help me collate my time data. (Optional, but strongly preferred. I can always use my iPhone’s timer for this.)

I think that about covers my wish list so far. Ironically being a bit pressed for time, I decided to use the above criterion to briefly evaluate the first five time tracking tools on the list I made rather than go through all of them. If any of them stood out, I’d trial it. If none did, I’d move on to evaluate the next five. Here’s what I discovered:

Whittling the List of Tools Down

Let’s Freckle

• QuickBooks Integration: No, but it does export to CSV and other formats.
• Project Management Integration: No, except for basic importation of information from BaseCamp.
• Attractive Time Sheets and Reports: Yes, it’s attractive and has some reporting features.
• Third-Party Time Review: No, I didn’t see an apparent ability for people to log in and inspect my work
• Web Based: Yes.
• Mobile Apps: No.
• Time Clock Features: Yes

FreshBooks

• QuickBooks Integration: No QuickBooks Integration to any significant degree.
• Project Management Integration: Yes, there is integration with task management tools such as BaseCamp and DeskAway)
• Attractive Time Sheets and Reports: Yes, the time sheets are attractive there is some level of reporting that can be done
• Third-Party Time Review: Yes, people can log in and see my work
• Web Based: Yes
• Mobile Apps: Yes
• Time Clock Features: Yes there are time clock features including integration with other dedicated clocking tools in case you need more features than FreshBooks offers.
• Other cons: Freshbooks tries to be a lightweight accounting package. It time tracks, invoices, keeps track of cash flows and more. It does a ton of stuff. I think it’s targeted at a different audience than me. It’s quote expensive as well, but that’s likely because it’s a very large package intended for being used as a QuickBooks alternative for small businesses.

Market Circle’s Billings Pro for the iPhone

• QuickBooks Integration: No
• Project Management Integration: No
• Attractive Time Sheets and Reports: It’s attractive enough and there are some reporting features.
• Third-Party Time Review: No apparent way to share time sheets with others.
• Web Based: Yes
• Mobile Apps: Yes
• Time Clock Features: Yes
• Cons: Heavily focused on the mac platform and the iPhone. That’s rather apparent based on it’s title. It needs one Mac to have the server software installed on it as well. No big deal, but I don’t have a Mac – and it doesn’t have much of anything else that I wanted. It’s just not for me.

Get Harvest

• QuickBooks Integration: Yes. Apparently it directly imports time info into QuickBooks! Woot!
• Project Management Integration: Yes, it integrates with task management tools like BaseCamp and RedMine! Redmine!! Did you hear me? I said REDMINE!!
• Attractive Time Sheets and Reports: Meh. The time tracking doesn’t seem to have much visual appeal, however the reporting features seem to be nice.
• Third-Party Time Review: There does not seem to be a way to share time tracking info with others.
• Web Based: Yes
• Mobile Apps: Yes
• Time Clock Features: Yes, the time clock is both online and a fat app for Windows and Mac. I wish one for Linux, since I’m now a Fedora user! =( However, I may just use the iPhone app and lay my phone on my desk next to me as I work. I used to do that in times past just to time myself to make sure I was staying focused on work.

1 Day Later

• QuickBooks Integration: No
• Project Management Integration: No
• Attractive Time Sheets and Reports: Time tracking seems visually appealing, but it’s hard to tell since so little of the application is shown on the site. There doesn’t appear to be much in the way of reporting.
• Third-Party Time Review: No apparent way to share time with others.
• Web Based: Yes
• Mobile Apps: Yes
• Time Clock Features: Not sure
• Other cons: The website is very sparse on information. Very small, skewed screenshots of the app are shown. No videos, no walk-throughs. nothing. Very poor form for any place trying to sell a product.

At the end of my five service preliminary review, one has certainly stood out amongst the others. Is it obvious? Get Harvest! The other four seem to be lacking in some crucial elements that I need and will be scratched off my list permanently. I’ll be evaluating Get Harvest over the next month and report back with my findings. I’ll similarly sift through the remaining time tracking tools at a later date and possibly perform a more in-depth trial once Get Harvest has been sufficiently tire-kicked. In the mean time, if you see any new time tracking tools that aren’t on my list here, comment over there with your suggestions and I’ll add them.

Do you have any experience with any of the time tracking tools listed above? Any opinions you’d like to share? Go right ahead in the comments below.

I’ve done it! I’ve successfully created a Single Member LLC in the great state of Arizona! w00t!!!1! Okay… sooooo… now what?

If you recall in the first part of the first episode of this series over on my old blog and the second part of the first episode posted on this blog, my direction when creating my own business was aimed more at being a consultant or contractor. In fact, the impetus for me to start a business was because a friend needed a technical manager for an upstart website and wanted to contract me. To be contracted I needed to be a business entity. As a result, I chose to form as a simple sole-proprietorship.

In the second episode, I reconsidered my assumptions about how to form my business and chose to form an LLC which gives me greater legal protection. It also future-proofed me if I decided to create a more significant business in the future.

But was I going to make a more significant business? As I considered owning a business and the possible directions I could take it, I had a moment of clarity: I don’t like working for people.

Maybe that’s a bit harsh. I actually enjoy working and interacting with people of all kinds, in all departments and with all temperaments. That’s the truth. It’s not that I don’t like working for people as much as I really enjoy designing, implementing, maintaining and optimizing systems. That’s not something that I can be guaranteed to have the opportunity to do if I work for any ol’ company.

I like to call the shots and design things exactly how my engineering mind is convinced is the best way. I don’t like to be hobbled by the potential for a Sr. manager or director being hornswaggled by a salesman or his nephew that’s “really good with computers” giving bad advice. If I’m going to be called out for poor design, Id rather it be by a fellow SysAdmin who knows why I’m making a mistake rather than a director who doesn’t think I’m buzzword compliant.

Prior to starting a business I was looking around at higher-responsibility jobs and feeling tense. I really wanted to be part of an organization that was proactive and progressive in their view of IT. However, I worried about being in a department that was stifled and choked. Thinking about doing all the footwork and research to find a good company to work in was a bit overwhelming. Plus, I’m a bit mis-trusting of IT headhunters. (Any angelic IT headhunters out there reading this, please forgive me)

After beginning to start a a business merely to be contracted by my friend (which was intended to be a part-time job), I considered becoming a full-time contractor. However, the stories of what IT contractors often have to endure frightened me. “You’re Mr. High-Priced-Contractor, you’re supposed to know everything yesterday and work 80 hours a week for your whole 12 month term!!”

I then considered starting a MSP. After some thought, I realized that staring at a management console (GFI Max, for example) and shuttling around town doing what amounted to overpriced help desk work made me weep in agony. Plus, there was far more of an initial investment in equipment, software and salesmanship than I felt I could afford. Especially the salesmanship part.

So how could I land a job doing what I like to do and ensure that it was in a great environment? I don’t even have to have free food and massages! Is that too much to ask?! It seemed like it was. Woe! Woe unto me!

Then an inspired idea came to me: Why don’t I make my own job? I know what I like the most and where my strengths lie. I know where and how I’d like to develop my professional skills. I could choose to design and implement exactly what I wanted to work with (provided my funds and the market were favorable).

I started to think about it deeper. All of the articles I’ve read over the last year and a half were all aflutter about outsourcing, SaaS and cloud computing. Many analysts have been cogently arguing that SaaS and cloud computing are changing the face of the SysAdmin profession. Those concepts and others are seen as continually pushing IT workers out of internal IT departments and into departmental units or service providers.

If you want to read more about it, you can see my articles “Corporate IT – More Suggestions of the Changing Role of the SysAdmin” and “Avoiding SysAdmin Obsolescence; The Only Thing We Have to Fear is Telepathic Robot Drones” among others on this blog.

It all made sense, but was scary and made me just a little sad at first. I had held onto the idea of working as a member of a traditional internal IT department. However, in the last year or so, especially the last few months, I’ve been convinced that the SysAdmin role is changing. Changing right now as I type this. And it’s a change that is logical, needed and one that isn’t going to turn back. I’m convinced that much of the future of Systems Administration is in SaaS, cloud and service providers. It was time to live what I believed. From those convictions, my company is born.

I am starting a hosted services company. I also have some smaller business ventures that will hopefully create a modest revenue stream so I can save and then invest in the creation of my first hosted service. I hope to begin setting up the first hosted service later this year (2010).

So what service am I going to start with? What’s my company name? Where’s my website?! What are my prices?!?

I’m not going to tell you! At least, not yet anyway. I don’t want to turn this blog into some kind of marketing channel or advertisement for my services. I want to stay as indie as possible. In all likelihood, I’ll mention my company name at some point in this blog’s lifetime. Just not right now. Maybe not for a while. Anyway, it probably wouldn’t be that hard for someone to find out what my company is named if they searched a few public records databases.

As far as the services that I will eventually be offering, those are much more likely to be discussed to some degree in the future. Probably not in reference to my company, or prices or general business chit-chat. It will most likely be exposed in a more editorial or troubleshooting sense. You see, I like to write. I like to share what I know (as much of a nublet as I am). I’ll most certainly share my experiences as I troubleshoot and evaluate various systems and engineering feats.

That’s my professional life as it stands now. This is one SysAdmin who has ditched the notion of internal IT and embraced the external service provider role. I have officially had a paradigm shift. Now I get to choose the technology I work with, call the shots and have all the fun. I get to work the budgets, approve the projects and eat all the M&Ms from the candy dish. Of course, I have to pay for those M&Ms, but I can live with that. I’ll also get all the blame if things go horribly wrong, but I think I can avoid that as well as anyone else that enjoys this job.

I’ll almost certainly be hiring help in the future as my projects get bigger and need more support and engineering roles. Who knows? Maybe you’ll be filling a position at my company in a few years. Are you willing to depart from internal IT to embrace a different SysAdmin paradigm?

Furthermore, do you think I’m daft in taking this leap? Is my business patently doomed to failure or mediocrity? Let me know what you think! It’s going to be an exciting several decades until retirement.

In my previous posts concerning my efforts at starting an IT business in my new home state of Arizona (Episode 0, part 1 and part 2), I had decided that a simple sole proprietorship was the way to go. However, I began to reconsider that course of action when I realized the liabilities involved in sole proprietorship (SP).

As a SP, all of my personal assets can be auctioned off to settle a debt. A Limited Liability Company (LLC) affords some protection to my personal assets. Furthermore, I began to have grand ideas of creating an actual business rather than simply acting as a hired gun. MSP, ISV, ASP, SaaS providor? It is all within the realm of possibilities… and it’s all suggesting an even greater need for some liability limitation. I figured it would be best to preempt the future and make an LLC now.

I found a law office in Arizona that has a ton of great information concerning the formation of LLCs in the state. While it’s specific to Arizona law, I believe that the information provided is still useful in general if you’re looking to form an LLC.

The basic information to take away is that LLCs are considered a “liability deflecting entity” that can and should be formed around any business venture. Some folks that own and rent property even create a separate LLC for each and every rental so the liabilities of one won’t threaten the others.

While LLCs can mitigate the risk of personal liability and increase the likelihood of creditors working out a deal with you, they are not bulletproof. If not formed correctly and with enough due diligence given to its continued operation, a court can “Pierce the Corporate Veil” and hold individuals accountable.

Depending on the state you live in, part of the due diligence of operating an LLC can include, but is not limited to (great, I’m sounding like a lawyer) not using corporate money to pay shareholder debts or expenses, not creating Articles of Organization, failing to hold director / manager meetings and keep minutes or filing actions by unanimous consent.

All of the specifics of the LLC formation process are dependent upon the state (or country) that you live in. Really, you should talk to a lawyer and have them set your paperwork in order.

Once you fill out the initial paperwork to establish your LLC, your state may require you to publish some kind of notice in a newspaper or on a public board and then send in an affidavit to your state’s corporate commission. For example, as of the time of this blog post Ohio and Arizona require all three steps, whereas Kentucky is one of many that doesn’t need a notice of publication.

At this point you’re finished or very near to it (depending on your state). You can then elect to receive an EIN number (again, this is specific to the USA) to use when creating business bank accounts. Business finances is a whole ‘nuther can of worms so I will leave you to consult with a tax and finance  professional (like I’ll be doing shortly).

As of this writing in May of 2010 my own LLC papers have been filed, accepted and are awaiting my Notice for Publication papers to be filed at a newspaper. once that is finished, I will have my very own LLC and will be free to take the business where I see fit.

Whew! What a responsibility. Have any of you readers trod this ground before me? Any advice would be greatly appreciated.

(Post updated to include backlinks to previous blog posts on my efforts to start a business. Thanks to Jon Angliss!)

An article on ZDNet was both saddening and encouraging at the same time. “The Vanishing IT Department” summarizes a Corporate Executive Board report that predicts that corporate IT departments will have shrunk by 75% by the year 2015.

The article makes perfect sense to me. IT is no longer an advantage in and of itself for a business to have; it’s just par for the course. The emphasis is now on refining IT services to specific business units’ specifications. That means that not only will IT become more decentralized by aligning itself with individual business units, portions of IT  will also be outsourced to external specialist service providers that have refined their specialist offerings.

The overall population of technologists won’t be reduced, the population’s distribution will simply shift.

The standalone, distinct IT department is becoming obsolete and inflexible and its monolithic days are numbered. That makes me a little sad. I’ve had the privilege of working part time in an IT department at a mid-sized organization. I know first-hand the camaraderie and just plain fun that a centralized IT department can have designing and implementing technology for various departments.

I also know the difficulty that is inherent in one team attempting to see, feel and meet the needs of widely disparate departments. I see the need for IT to be less monolithic, but part of me doesn’t like it. Why? Because I’m hideously selfish. However, IT isn’t there for it’s own (or my own) enjoyment.

I’ve also done a lot of “Standalone / Lone Sysadmin-ing” (apologies to Matt Simmons and Bob Plankers) from an outside contractor perspective. It’s not as fun to be an outsider. I have been hoping to find employment with an internal IT department (or becoming a small business’s IT department) and leave my days of an informal consultant/contractor role behind. It feels cold and lonely sometimes and I don’t particularly like it. :’(

Okay, I’m better now. So what was the encouraging part to me in all of this? In case you haven’t seen any previous blog posts about my endeavors, I’m starting a business. My intent is to become an LLC so that a friend can contract me for a specific job he needs done. However, I started getting this crazy notion to run further with the business and become a managed and/or hosted services provider.

While IT isn’t for it’s own enjoyment, I believe that you can’t persist at doing something that you don’t like. I don’t like constantly doing help desk work or installing LinkSys routers. I want to work on WAN optimization projects, multi-site software deployment strategies and servers that are so powerful the earth’s magnetic field is warped just from turning it on.

When I think “MSP” I think of a whole lot of printer jockeying and hard drive swapping. Yuck. However, as things stand right now, MSPs can service much larger organizations in the form of specialized services. Examples include designing storage solutions, database clusters, high availability, backup and disaster recovery strategies, and more.

The above ZDNet article encourages me that the outsourced IT industry will only continue to grow and the projects that will be outsourced are larger and more exciting than was previously common.

In fact, I’m thinking less “MSP” and more “IT Solutions Provider”. Add some hosted services to the portfolio and you’ve got more fun than a box full of ADHD puppies on Red Bull. I’m drawing some inspiration on the business offerings of OmniTI. There’s plenty of pie to go around, so Theo has nothing to worry about from me. Plus… I’m nubby so he’s got that advantage going for him. Oh, and he employs 40+ embodied brains that write books and speak at conferences and things.

What have you experienced in your own IT department? Increased outsourcing? Or are you a contractor, MSP, ISV, etc. that is seeing an increase in business? Do you welcome this or rue the day when you’re IT department needs only two pizzas to feed it? Most importantly: Are you ready for the shift? (I.e. Would you work for me? =) )

(Post updated on May 17 for spelling and grammar refinement)

It’s been a while since I continued this topic. The proverbial 100 hour workweek has taken its toll. Picking up where I left off, I have 5 more points to go through in the www.Business.gov article “10 Steps to Starting a Business”.

Step 6: Register a Business Name (“Doing Business As”)

By default, your business name is the same as your full personal name. If you want to use something other than that, you must file for what is variably known as a “Fictitious Name”, “Assumed Name”, “Trade Name” or DBA (“Doing Business As”, not the DBA that we IT pros think of).

The ways you go about registering your fictitious name vary depending on the state or even the county in which you live as well as what type of business you’re setting up. LLCs and Corporations have different methods for filing business names. For me, as a sole proprietor, things are relatively simple.

As for my state and county’s regulations, Step 6’s page has a complete listing of all 50 states, their filing requirements and links to the appropriate sites. No guarantee on how up to date those links are kept though.

Interestingly, my state (Arizona) does not require a formal registration of a business name, however it is “an accepted business practice” and is necessary to avoid someone else using your business name in the future. I have to file with the Arizona Secretary of State’s office.

And now comes a somewhat amusing part of the story. About two or three years ago while living in Ohio I had picked out an informal business name that I never registered. At the time, I merely searched for registered domain names to see if anyone else was using the name. I found that someone else had registered that name as a .com but not as a .net or .org.

I didn’t think much of it, realizing that two businesses can have the same name if they’re in different states. I registered the .net and continued to informally use it when registering for webinars or filling out questionnaires. I never actually made any money or hired myself out under that name, however.

Now, after moving to Arizona and attempting to develop a business name in earnest, I looked closer at that web site / individual that had been using the same business name that I wanted..

It turns out that the person using that business name has a fairly successful website for consumer electronics and not only lives in Arizona, but in Phoenix at an address just a few miles from where I now live! Furthermore, his profession is in the IT industry and his job title is “IT Systems Engineer”.

No. Way. Ever.

Technically, the business name that he uses for his website is not registered in the state of Arizona, however I wasn’t down with using the name that he has been using for years… especially not with him living in the same town and working in the same profession and having the same first name. That just wouldn’t be nice of me.

Back to the drawing board for business names. Fortunately, the state of Arizona has a nice search feature to help when looking for already registered business names. That tool helped me realize that it’s very, very hard to be original these days. Well… “sdgkj2$G4h” is original, so let me qualify that a bit better. It’s hard to be original and good these days.

It’s also worth noting that the rules surrounding accepted characters, abbreviations, offensive words and even World Wide Web based prefixes and suffixes (such as .com) within a business name can be rather complex. Make sure you read up on your state’s trade name standards. As an example, this is Arizona’s standards document.

After some pondering, I came up with what I believe is a decent business name, somewhat similar to the old one, certainly not original (a few dozen other companies in the Phoenix area have the same basic name, but none of them are in the IT field) but certainly not bad. Crisis averted.

Step 7: Get a Tax Identification Number

Two things being certain in this world, death and taxes (although I’m certain taxes are even more unavoidable), you knew something like this was coming.

There is an EIN, which is your federal tax ID (also known as an Employer Tax ID and a Form SS-4), is used to identify a business in the eyes of the IRS. Almost every business entity needs one, with one notable exception. If you can answer “No” to all six of these questions, you don’t need an EIN.

As my understanding goes, as a sole proprietor with no employees who does not file any excise of pension tax returns, I do not need an EIN. Instead, my social security number will suffice. However! Some will recommend getting an EIN even as an independent contractor because 1)It keeps your social security number off of more paperwork than it needs to be on, 2)It’s easier to open bank account in the name of your business and 3)It makes it so that the IRS can’t classify you as an employee (reference).

Fortunately, the IRS makes it oh-so-easy to get an EIN number. You can apply online!

Step 8: Register for State and Local Taxes

The Federal government isn’t the only ones who require a few ounces of flesh from you. Each state has its own tax structure, so check out Business.gov’s list of all 50 states and links to their specific business tax information pages.

Unfortunately, two of the four referenced links for my state, Arizona, were broken. However, I was able to find a lot if good information at www.AZTaxes.gov (gotta love that domain name).

Part of the state tax process in Arizona and I’m assuming other states is to get a business license. However, not all business require a business license and other need multiple license. Further complicating things, there are three types of business licenses that you may or may not need a combination of.

I’ll leave you to figure out the specifics of your state and personal situation, however you may want to take the advice of my state’s tax website and “Consult your attorney”.

Step 9: Obtain Business Licenses and Permits

This is in many ways a repeat of the previous point. Getting a business license and permit seems to be part and parcel of getting a tax license. Stepping through the mire that is part 8 will get you to many of the same places that you will end up in part 9.

Step 10: Employer Responsibilities

If you decide to become an employer and you further decide to hire people on an employee basis rather than a contractor basis, weep in agony, poor soul.

It is an expensive and complicated thing to have an employee. Forms such as W-2s, W-4s, Copy A’s, I-9s, New Hire Reports, Forms 941 or 944 and who knows how many state level documents have to be filled out. Furthermore, you start paying things like Unemployment Insurance taxes, Workers Compensation Insurance and possibly Disability Insurance. Did I mention Form 940 and FUTA?

Oh yes, you open up a whole can of worm and the government opens up a different kind of can on you, especially if you get something wrong. For me, I’m not planning on employing anyone soon – especially considering the flaming hoops and minefields you have to be careful of. I’ll stick with hiring contractors if I need some extra work done, thankyouverymuch.

So that’s it! Simple, no? No.

Annoyingly, I haven’t even made it past step 6. Furthermore, I’ve decided to pursue a different business structure! If you followed my previous post that chronicled the first 5 points of the Business.gov 10-step program, you know that I had originally decided on a Sole Proprietorship.

I started to consider what that meant. I’d really like to branch out past this initial contract that a friend offered me. I’m even considering becoming a MSP and/or hosted services provider. If I do something daft at a customer site like knock an email server over or mash up a CRM database, I will be personally liable for all damages. That means all personal goods can go up on the auction block to pay damages. House, car, clothes, heirlooms, pets, you name it.

However, if I become an LLC that scenario no longer exists. All business assets can be auctioned, but nothing personal. I previously thought I could simply convert to an LLC from a sole proprietorship when the time came. Then a thought came to me: “Why wait?”

My previous hesitation at becoming an LLC was due to the additional paperwork required, but seeing the imminent deforestation that will be required for steps 8, 9 and 10 (should I ever do 10) pretty much makes it improbable that a few extra slices of paper will make the load much more unbearable.

With that determination in mind, I set off on a slightly different course: Becoming an LLC! Any insights are greatly appreciated.