Business Beginnings Series: How to Start a Business in the Wedding Industry
WHOO-HOO, the long-awaited Business Beginnings Blog Series has begun! I love me some alliteration, and I also love chatting about business. One of the first questions I had for myself when starting out was: When does this hobby become a business? There are SO many different beginnings you have when you start a business, so this was an important distinction for me to make, and also one that I get questions on a lot.
So, I surveyed 30+ of the best (in my totally unbiased opinion) wedding vendors, and asked them about how they started their business and how to help others start one as well! This two-part post will cover the paperwork and specifics of what you "need" to start a business (today's post) and also how to get over the hump from hobby to business (next week)!
Making the Transition
I see people in my communities posting questions and prefacing with "Well, I'm not a business yet..." or "I am trying to become a business..." and these insecurities are ones that plague all of us from time to time. In the art world, it's tough because people constantly make you question your legitimacy as an artist. My own father - who has 2(!) of my paintings framed in his waiting room for all of his patients to see - recently saw a photo I had painted (of my puppy, of course) and told me "Hey, I didn't know you were such a good artist!" Um, no offense dad, but DUH.
With all these questions and insecurities, it's no wonder that in the wedding world, we have a tough time making the "official" transition from "I don't know, I guess I take pretty pictures sometimes..." to "I am Owner, CEO, and HBIC of this Bomb-Ass Business. Bow down to me!" Luckily, all of these awesome business owners have given us some of their sage wisdom to help make that transition a little easier!
The Business Owner Survey Results
Because most of the questions were open-ended, I won't post exact results, but more overarching themes. The sample size was 32 and we had a pretty even mix between planners, photographers, and stationery designers/calligraphers, with a few others (hair and makeup artist, rental company, letterpress printer, photobooth rental, and a bridal salon).
Types of Business Ownership
58% of those who responded were Sole Proprietors, which is also what I am! There were three different types of businesses represented, which are probably the 3 most common in the wedding industry: Sole Props, Partnerships, and LLCs.
Sole Prop | A sole proprietorship is what a lot of us one-man or one-woman shows opt for. This is the simplest form of ownership, and allows you free range in a lot of ways to run your business out of your home, file taxes very easily, and get a FBN or Fictitious Business Name. You can still have a Tax ID or EIN with a Sole Prop and get the benefits of wholesaling. However, if you have even a single employee, large equipment, a physical location, or any other large physical assets, then a Sole Prop is not the safest way to go to protect yourself. In fact, if you have a family, many recommend incorporating to protect them. But hey, it works for now!
LLC | An LLC limits liability (wow, it's almost like that's what it stands for!) if you ever have a claim against your company. Even if you are a one-woman show, you can still benefit from an LLC, and it is definitely the best if you have any large assets in your business, like physical property.
Partnership | You can have a partnership that's incorporated and limited, or one that is "general" and operates similarly to a Sole Prop, but with multiple people. Just remember, you are both/all responsible for the partnerhip's debts. Only 4% of the survey respondents were partners!
What Other Paperwork Do I Need?
Depending on your specific niche and location, you may need other certifications, such as a retail license, a cosmetology license, or local county filings - make sure you check your local requirements. In San Diego, I got an FBN and had to publish it in the paper for 4 weeks in a row - there was no real purpose to this that I saw, except to get me about 45823 telemarketing calls per day, but hey, you do what you gotta do for the sake of the business!
Paperwork-wise, you will also need a bunch of other forms, depending on your industry. Nicole of Nicole George Events mentioned that, as a planner, you "should be providing [y]our clients with a lot of resources off the bat for efficiency as well as being organized internally and prepared for the next steps of a client's experience...inquiry forms, questionnaires, guidebooks, our own professional contracts, invoicing forms, internal meeting worksheets, client information forms, checklists, accounting, ...example timelines, vendor contact sheets, etc....".
PHEW, that's a lot to process.
Most of us use a CMS or Customer Management Software for these forms, and many integrate with Accounting software now. I use Dubsado , and there are tons of other options, such as Honeybook, 17Hats, and Trello, to name a few. This all seems daunting at first, but my advice is to just go at the pace that you need each form and keep improving. I added something new to my proposal after the first 38 or so projects, based on some little hiccup I experienced during that job. It's amazing how quickly everything will come together if you keep up with it!
Other documents are not technically required to begin a business, but the most important one from our survey respondents was the Contract. I capitalize it because it's Important! Paying a lawyer to help you create or go over your contract is one of the best investments you can make, and - I will put this in all caps because it's extra important - ALWAYS USE A CONTRACT.
That was an important point in the switch from hobby to business. Basically, one day a wedding planner said "Great, send over your contract and I'll have her sign it" and I panicked and spent 4 hours making a contract that night. Later, that same planner told me that that was the way she knew I was legit and we laughed about how I completely freaked and made it just for her client, because she was the first to ever request it. BUT the moral of the story is that contracts make you look professional more than any other step I can think of, and they protect both you AND the client.
I set my contract line at Thanksgiving Dinner. Basically, if I haven't had Thanksgiving dinner with you in the past, then we need a contract. Even so, I would never complete a job worth over $250ish without a contract, unless it was for my mom (because I owe her my life, which is slightly more valuable than any stationery I could ever make!).
Oh right, I guess we should chat about money too! One of the biggest differences between a hobby and a business is that a hobby handles its money professionally. This means a few things:
- Pay Processing Fees Any way that you can accept credit card payments without a processing fee (PayPal Friends + Family, Venmo, Adding the Fee to your costs) is NOT OKAY and is just not professional. Most of these have no protections for sellers, so if your buyer starts to question the sale, you will probably lose. Everyone in every legitimate business pays the 3% (ish) processing fees, and you should just build that into your cost of doing business. Plus, you can write it off, which brings me to....
- Pay Taxes. PERIOD. It's confusing and tough to decipher at first, but you should start doing it the moment you make more than $1,000 in the same year on your business. Check your local tax regulations. As a freelancer, you'll likely have to pay quarterly, and we recommend putting aside about 30% of your revenues to pay taxes. Sales tax will be based on where your product is being used, so make sure you are charging that correctly if you have a resale license. Depending on the state, if you have a service-based business (photographers, wedding planners), you may not have to charge sales tax. I personally charge sales tax in all cases unless I am providing calligraphy for envelope addressing, as that isn't required in North Carolina.
- Use Invoices This will just make you look professional, and help you keep track of things for tax purposes.
- Use Accounting Software And this one's simple, because it just helps you do numbers 1-3 more easily! Save time, save money, plus you can talk about things like "reconciling your accounts" and sound like you actually know things about accounting.
After being a little demanding on the money front (sorry, guys), I will leave you with a positive note from the survey. When asked how much money they'd recommend someone start out with to open a business like theirs, one third of all participants said $1,000-$5,000. That's AWESOME, y'all! You've all seen Shark Tank - what kind of business can you start with only $5,000? Almost any business in the wedding industry, that's what kind.
Now don't get too crazy, I highly recommend saving up enough to live for 3-6 months (depending on your family situation and Risk Averse Level, hah!) before quitting your desk job, but it's so nice not needing a ton of startup capital to open a successful business. I started out with a bunch of $6 inks and some $10 packs of envelopes, and just ran with it.
Given an entirely free response (ie, not a multiple choice question), almost all of those surveyed said they reached their salary goal for their business by the second year. This is a really unique industry in that regard, because it's constantly growing and changing, and knowledge and skill are valued in many cases over things like advanced degrees and years of experience. Once you start giving it your 100%, it doesn't take long to thrive in an industry like ours! Of course, there are some bumps in the road, but in a few weeks we will cover how to survive and last over time in the wedding industry too! So for now, just focus on getting your paperwork in order, and stay tuned for next week when we talk about really transitioning your mindset from hobby to business!