Interview with entrepreneur Nellie Akalp on small business issues: Part 2

In yesterday’s post, Nellie Akalp, a serial entrepreneur and small business expert, answered questions about choosing the right legal structure when starting your small business. In today’s post, she answers questions on getting started and on common mistakes you should avoid because they may lead to legal problems. Nellie currently serves as the CEO of, an online legal document filing service, where she helps entrepreneurs start a business, incorporate or form an LLC and offers free business compliance tools. In the first of two blog posts, she answers questions we posed about what legal format your small business should take. Connect with Nellie on Google+ and contact her at

The number of people who are working alone as solopreneurs or freelancers out of their homes keeps growing. What legal issues do these people need to consider?

Akalp: Legally speaking, starting a business for solopreneurs or freelancers out of their home is similar to someone starting a business outside the home. However, there are a few non-legal technicalities they should look at:

Determine Your Space

If you plan to start a business services company, you probably won’t need too much space; a desk in a corner, computer and filing cabinet should suffice. But if you plan to make products or buy and sell them, you’ll need more space. Look at your garage as a potential future office, as well as a basement or guest room.

It’s important to have space dedicated to your small business so you can separate your home life from your work life. If you have an office door you can shut at the end of the day, you’ll find the separation easier.

Start Slow

Because you’re operating out of your home and don’t have the added expense of an office and other overhead, you may find it easy to start it slowly–perhaps even while still working at your 9-to-5 job–and ease in to growing it as profits start rolling in. This will reduce your financial risk and help you have the income you’ve become accustomed to getting in the form of a salary, at least until your business starts thriving.

What are common mistakes you see small business owners making that might cause them legal problems down the road?

Akalp: Some of the most common mistakes I find small business owners make are:

–    Not checking if you’re legally permitted to use your business name. It’s smart to check that a business name is available to use before you order your business cards, as you don’t want to be on the wrong end of a trademark dispute.

–    Choosing the wrong business structure when registering the business. Incorporating or forming an LLC can be a relatively quick and easy process, but choosing the wrong business structure can have a significant impact on your business and taxes.  Quick way to avoid this is to use’s Business Structure Wizard designed to assist you with selecting the right business structure for your business.

–    Failing to get a tax ID for your business and instead using your SS#. You don’t want to give out your social security number to every client and vendor your business encounters, so you’ll need to secure a Federal Tax Identification Number, also referred to as an Employer Identification Number.

You’re a very successful entrepreneur. Are there any mistakes you made in your early days that you’d like to advise others who are starting down this path to avoid?

Akalp: My biggest mistake to date was trying to use the same formula with my first successful business in my current business. Times have changed and as an entrepreneur, you have to change too, otherwise you won’t find that level of success. Luckily we caught on early enough to re-strategize and is a success!

I have also learned a lot from being a business owner since 1997. I’d advise other new entrepreneurs to start slow and have a business plan. Track every penny and revisit your numbers weekly to make sure you know ad understand where each dollar is going and coming from. It will help you fine-tune the business along the way!



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