Top Questions — and Answers! — on Starting Your Business
Every day at The Travel Institute, our coaches receive calls from many people looking for a start in the travel industry. Here are the most frequently asked questions, along with our advice:
Question: How should I structure my new business?
Answer: The issue of setting up your business is very personal and should be tailored to your needs and plans. There are several forms of business organizations, and no form is perfect for every person. Here are four common structures:
- Sole proprietorship – This consists of one individual or a married couple and is easy to form because there are few legal formalities. However, it is advisable to consult a CPA or attorney because sole proprietors are personally responsible for debts, and their personal assets can be exposed to liability.
- Limited Liability Company (LLC) – This is created under state law through a written agreement and is separate from its owners. Your personal liability can be limited or restricted to your investment in the company SO LONG AS business records and assets are kept separate from personal records.
- Subchapter S Corporation (S Corp) – This is formed under federal tax laws. The federal government places more restrictions on S Corps than state governments place on LLCs. It is separate from its owners and enjoys pass-through tax status and limited liability, SO LONG AS business records and assets are kept separate from personal records and all corporate requirements are followed.
- Subchapter C Corporation (C Corp) – This is formed under federal laws and has the most governmental restrictions. There are advantages in its ability to attract venture capital. It is separate from its owners and offers limited liability SO LONG AS business records and assets are kept separate from personal records and all corporate requirements are followed.
You should seek the guidance of a lawyer or CPA in deciding which entity is right for you. For more in-depth information on this topic, join us tomorrow for the webinar Six Tips for Choosing the Best Business Structure for Your Travel Business (members only). Not a member? Join today and attend for free.
Question: Should I set up a separate bank account for my business?
Answer: Yes. No matter which structure you select, it is important for legal and financial reasons to separate your business records from your personal ones.
And, if you are an independent contractor who receives commissions, you should know that income taxes, Medicare, and Social Security are not withheld from income. ICs use 1099—Miscellaneous Income forms to pay taxes. This is different for agency employees who file W-2—Wage and Tax Statement forms.
Keeping perfect and pristine financial records will make your life much easier. It is important to seek the advice of an attorney or CPA regarding finances and taxes.
Question: Where do I find my clients?
Answer: You can start by creating a list of people who are potential clients. The number of people you know and who know you often can number in the hundreds! These include your friends, family, casual acquaintances, your friends’ parents and children, the coworkers of your spouse or partner, and your social media contacts.
You also should identify your hobbies, niches, professional groups and clubs, and aspects of your lifestyle, then think of the people who share those interests. These can be members of book clubs, garden clubs, wine-tasting groups, Disney aficionados, and other affinity or special interest groups.
In compiling your book of clients, ask why you are trying to sell travel and whom you want to help with your services. The answers can point you in the right direction.
Question: Where do I start?
Answer: To become a travel professional, it takes more than a love for travel. Having a passion for helping people see the world is a great place to start, but there are other important considerations, such as: Do you know the information required to research and book your clients’ air, accommodations, tours, cruises, or ground transportation? Do you know the basic recommendations for international travel? What qualifying questions should you ask your clients to help them narrow their vacation options? How do you promote your value to your clients? Do you know the basic business requirements to start an independent business, build a marketing plan and develop a niche? Do you know who your ideal client is?
These questions often get bypassed in early education in the travel industry, making for a much longer learning curve and a delay in sales. Be sure to enroll in a program that will provide you with a well-rounded learning opportunity, such as The TRIPKIT introductory program.
Starting a business takes time and is hard work. We are here to help. Continue your learning by attending a free webinar on February 11, 10 Steps Often Overlooked When Starting a Travel Business.