How to start your own business

To understand whether it is worth starting a business, answer the following questions:

• What do I offer to clients?

Try to objectively assess whether people need your product or service and what makes it unique. Be sure to look at what your competitors offer. Analyze what they do well and what they don’t do so well — try to find your niche in the market.

• Who is my buyer?

Define your target audience — who will be interested in your product or service. Think about what obvious or hidden consumer need you would like to satisfy. Imagine your potential buyer: gender, age, marital status, social status. Ideally, you also need to understand the client’s problems and desires, the peculiarities of their behavior and character, imagine situations when your service or product will be useful to them. A clear understanding of who your buyer is will be useful at all stages — from selecting the product range to advertising and promotion.

• Where and how will I sell my product?

Perhaps your audience is used to buying everything online, then it will be enough to choose the best delivery methods: estimate how much you will have to spend on postal or courier services, which companies you would like to cooperate with.

If it is important to try on your product, feel it, and evaluate it in action, it is worth thinking about the premises for the store, where and under what conditions to rent it.

Another option is to sell products through a marketplace and use its delivery service. Then, your products will be tried on and inspected in front of the courier or at pick-up points.

• Which price to choose?

Estimate the approximate cost price of the product. Analyze the market and think at what price your product will be ready to be bought. Calculate whether it will be possible to cover all expenses and make a profit.

If your idea still seems promising and can generate income, try testing it on your target audience. After that, the idea may transform a little, but in the end, you will have a clear business strategy .

Write a business plan

Based on the strategy, create a detailed development plan for your project. You, your business partners, and potential investors or creditors will need it.

The business plan should contain a detailed description of the product with options for its further transformation, a market analysis with a description of all groups of competitors and characteristics of potential buyers.

Without numbers, the plan, of course, will not be convincing. You need to understand in advance how profitable your business will be. Therefore, the business plan should include several mandatory components:

• production plan and calculation of the cost price of goods or services;
• promotion plan, cost estimate for advertising and other types of communication with clients;
• organizational plan and assessment of employee salaries, as well as external services, such as courier services;
• a financial plan that takes into account all cash flows: sources of project financing (for example, personal savings, loans, partner investments), expected income and expenses, including one-time expenses and taxes.

Ultimately, the business plan should show how much money you will need to launch the project, when it will become self-sufficient, how long it will take to recoup the investment, and what profit you can expect.

Register your business

You can conduct business as a self-employed person, an individual entrepreneur (IE), or a legal entity (usually a limited liability company – LLC).

1. Self-employed status is convenient for those who sell their own goods or services and do not hire employees. Becoming self-employed is the easiest – for example, you can download a special application”My tax”, through it to transfer information about income to the Federal Tax Service and pay taxes. No other reporting will be required.

But if you need money to develop your business, you will most likely have to rely only on regular consumer loans. In addition, the annual income of a self-employed person should not exceed 2.4 million rubles. If the business grows, you will have to register as an individual entrepreneur, for example.

Alternatively, you can register as an individual entrepreneur and self-employed at the same time. Then you won’t have to submit reports or pay insurance premiums — you just need to upload your income data to the “My Tax” app and pay the minimum tax. And when your turnover exceeds 2.4 million rubles per year, you can simply switch to another tax system.

2. Individual entrepreneur status  is suitable for those whose business is small, but whose annual turnover exceeds 2.4 million rubles or who have hired workers. For example, a small store or production. Individual entrepreneurs have the widest choice of taxation options. For example, when the staff does not exceed 15 people, and the turnover is 60 million per year, the patent system may be the most advantageous – it is available only to individual entrepreneurs.

It is often easier for an individual entrepreneur to find customers than for a self-employed person – many companies prefer to work only with legal entities and individual entrepreneurs. In addition, unlike the self-employed, individual entrepreneurs have access to business loans, leasing and crowdfunding.

It is more difficult for an individual entrepreneur to register and close a business than for a self-employed person. Although it is much easier than for an LLC.

3. The LLC status is usually chosen by those with big business ambitions. You can open an LLC yourself or together with partners – only for legal entities are several founders allowed at once.

An LLC is liable for its debts only with the property of the organization, while the founder of an individual entrepreneur and a self-employed person is also liable with his own property, which he owns as a private individual. But the registration and reporting of a company is the most difficult, and in case of violations, the fines for an LLC are an order of magnitude higher than for an individual entrepreneur.

If necessary, you can change the status of your business. For example, first register as self-employed, then register as an individual entrepreneur. And then close the individual entrepreneur and create an LLC.

Select a tax regime

Which tax systems are available to you depends on the form of business you choose.

The tax on professional income is minimal, but only self-employed individuals can choose it. As long as an individual entrepreneur does not have hired employees and the income from the business does not exceed 2.4 million rubles per year, he can also register as self-employed and pay only this tax.

A patent is only suitable for individual entrepreneurs. It is usually purchased by entrepreneurs who find it easier to pay a fixed amount to the budget than to deal with paperwork. But the business revenue for all patents must be within 60 million rubles per year. If you earn more, you will have to change the tax regime.

The remaining tax systems are suitable for both individual entrepreneurs and LLCs.

The single agricultural tax is beneficial, but only farmers can choose it. Moreover, the enterprise must not only process or sell agricultural products, but also produce them itself.

The simplified taxation system is convenient for small businesses, when the number of employees is no more than 130. And the income for the year does not exceed 200 million rubles, multiplied by coefficient, which is set annually by the Ministry of Economic Development. For example, in 2024, the revenue limit is 265.8 million rubles. Document flow and reporting under the simplified system are more complicated than in the case of a patent or self-employment, but much simpler than for the general tax regime.

The general taxation regime is available to any entrepreneur, but reporting under this system is the most difficult. You will have to pay value added tax (VAT) – depending on the type of your goods and services, it can be up to 20% of their price. It makes sense to choose this regime if you have many suppliers or contractors who also pay VAT. If your business does not fit into the restrictions of other tax regimes, then you will also have to switch to the general one.

What else does a budding businessman need to do?

Once you have dealt with the main issues, there are many other problems to solve.

• Open a bank account . Only self-employed people do not need to do this.
• Startonline cash register, if you have settlements directly with clients. By to the law Only self-employed people can refuse to issue cash receipts. And in in some casesIndividual entrepreneurs and companies, for example, if they sell ice cream at a kiosk or repair shoes.
• Learnconsumer rights.
• If you are going to rent or buy a property, check whether it meets the requirementsfire safety requirements.
• If you want to work with food products, understand sanitary requirements.
• Clarify whether your product must complystate standards.
• When you plan to import goods from abroad, find out how to declare them and whether they need to be certified.