Is it worth it to make this a business?

[Dr.Huxtable]

I've been doing some computer service for friends and coworkers occasionally the past few years, so it seems logical that I could start charging people a fee and make some side money while I'm in school. I don't see myself making more than a couple-hundred a year, maybe 2k max. I would love the benefits of some tax write-offs, but that's not the goal, and all I can think of that would really count for most of the operation is Internet access. What I want to avoid is exposing myself to liability, but I'm sure I can find or create some basic contracts/service agreements to cover myself.

Is this too much of a hobby? I could have very little income from this, it really depends. If I'm only making a couple hundred dollars, or less, is that easy enough to claim on taxes as an individual?

Another piece to this - my friend is looking into doing electrical component repair while he's in school, too. Would life be easier if we did this jointly as a LLC?

Any thoughts or links are greatly appreciated. I did some browsing already, but I think I've run into too much information for me to filter out what is relevant.

[vangogh]

Welcome to the forum Justin. What kind of computer services are you doing for friends? Chances are you can form a business around it, especially if you're not worrying at the moment about how large it is. Really all you'd need to do is start charging your friends and you'd be in business. I'm guessing you want to do a little more than that though.

You're really not going to see a great amount of tax write offs. Since you're in school I'm going to guess this would be your main income, and unless you make more than a couple grand a year you won't have much taxes to pay. Say you buy a new computer. The way it gets written off is basically that the expense is deducted from your income. So if you make $2,000 and spend $1,000 on a new laptop you basically have $1,000 of income to pay taxes on. Even at $2,000 you're not paying taxes though as the standard deduction is much greater. You really don't see the benefits of a write off until you're making more money.

There's no reason why you can't start a business though and you might be surprised that you can make more than $2k a year. Lots of businesses started as side projects by students.

If what you're friend is doing and what you're doing are similar enough you could go into business together. I doubt an LLC would make sense for you. A general partnership will probably be a better fit for now. Do you think the same customer would need both of your services? If you're both looking to attract different types of people as customers it probably makes more sense to be separate businesses.

The easiest way for you to start would be to start charging your friends a little for the work you do. If they're willing to pay for your services then it's likely other people will be too.

[Dr.Huxtable]

First, thanks for the reply I work 2 part time jobs, making about 20K a year. I'm doing basic system restores, virus removal etc - although I'm now opening up to doing hardware replacement/troubleshooting, home networking etc. I'm an Information Systems major, so, besides loving working with computers, I'd like more experience.

As for my friend, typically we'd be having different clients. The thought was that the fields are related, and it'd be easy for referrals to say 'my business partner can do that for you...'. But perhaps we'll just go with similar names and call it a 'partnership' for simplicity's sake. but not legally

[vangogh]

Well the 2 jobs definitely changes things then. In that case you probably will be able to deduct things and get a tax break. Naturally what you purchase has to be something you can justify as primarily being used for business, but it's still a nice perk.

All the services you mention are certainly ones people have formed businesses around so yes you can definitely set up a business. Are you thinking mainly having fellow students for customers or would you be seeking customers from the town or city you're in too? Either of course works, but you'd likely try different marketing based on who your customers will be.

With your friend if the customers/clients will be different then there probably isn't any real advantage to have a similar name. You could refer people back and forth to each other, but I think you'd be better off as separate businesses. The reason is that having 2 different businesses being one or even with similar names will only end up confusing potential clients for either business. You want people to hear your name and associate the name with you. You also want people thinking of your services and instantly recall your name. If both businesses are intermingled it confuses that.

There are still ways you can work together to help each other while being separate businesses. You can recommend each other. You can share marketing and advertising costs. For example say you decide to mail out a postcard or flyer. You can put one business on one side and the other on the other and split the costs. You can run promotions together, etc.

[huggytree]

to become a LLC costs almost nothing and making your own contract is easy (just find a few from the competition and combine/make your own)

i wouldnt do a partnership with your friend...there's no reason to...you dont need him, so dont get involved

find out what others charge for your service and price yourself in the middle of the market...you may find all the people getting freebees wont be using you when you charge...you may not really have any customer base...think about this before you bother...if you dont want to grow/expand this may not be worth trying

[nealrm]

Don't go into business with your friend, it's a good way of ending a friendship. Instead have him do his business and you do yours. Both of you can then refer job to each other while maintaining your independence.

[Dr.Huxtable]

The partnership doesn't sound like it makes business sense, thanks for the advice guys! huggytree, do you think that LLC is the way to go? or would a proprietorship with contracts be enough to cover me for liability?

vangogh - students and customers I find at my 'real' job would be where I get business - I work at a pet supply store, so it's not a conflict of interest. plus I'm not going to go in with a stack of business cards and solicit, sometimes it comes up in conversation. Probably not students, as the people I take classes with also have a computer related degree, and the university computer department will actually help students fix many computer issues (I find that to be pretty cool).

Is there anything else I should be thinking about? So far I have: register business name, order business cards, and start keeping track of related expenses.

[vangogh]

It sounds like you covered the few basics to get started. Next up is more learning, which will never end.

From a marketing perspective it sounds like you're mainly going to start with word of mouth at work and on campus. If you're not looking to grow the business all that much, the word of mouth could be enough. If you do want to grow the business more you may want to advertise in the student newspaper. I'm not sure how much that would cost, but you're best bet is likely a small ad placed in the same spot consistently and to keep the ad going for several months. A smaller ad run more often should outperform a large ad run once. You can do similar in local papers, though I would guess that will cost more.

You might as well put up flyers, with the tear off phone numbers at the bottom on every bulletin board on campus and in local stores that will allow it. It probably won't result in the greatest return, but it also won't cost much beyond some paper and some time. If you carry some around you can just add them as you come across the bulletin boards.

Another thought is you could offer free scans to people. Maybe only as an occasional special if it'll be too time consuming. You scan a computer and present your findings. If you can have your scan generate an automated report it shouldn't be too much work. People who don't need anything will be happy and probably share your name with friends. People who's scan doesn't come up clean are now motivated to have someone clean their computer. Naturally you'd hand out business cards to everyone and for those who decide not to hire you then and there you can give them a small discounted price on the back of the card with a limited duration. The main downside with this will probably be the time to do all the free scans. If enough people hire you it'll be worthwhile financially, but I also imagine your time is booked up a lot between the other jobs and school.

As far as an LLC I don't think you need one at this point. The main benefits of an LLC are the limited liability protection and the tax benefits. Since you're a student I'm guessing you don't own something like a house. Your assets probably aren't a lot and so there's probably not much that needs protection. Granted that's just a guess on my part. If you do have a lot of assets that need protecting an LLC could help. I'm also guessing you won't be making enough money for the tax benefits to be much of a benefit. Again I could be wrong. Being a sole proprietor is probably enough for your business at this point, especially if your plans are to keep the business small for now.

[Dr.Huxtable]

Thanks for the info! You're right, no house or anything, just a car, computer, tv etc. So sole proprietorship sounds best. Ill just start thinking about design for business cards/flyers and get started.

Thank you to everyone for taking the time to reply and share your thoughts!

[tylerhutchinson]

If you start a business and get a business name it will allow you to market your services and you will be surprised how much more you should be able to make. Most of what you are wanting to do cost little to no money to start. I use to do consulting as side work outside of my corporate business just to help have some extra spending cash for over a year. Just from that side work I was making more than my main job, and that was my "light bulb" to turn it into a business and I have not regretted it yet.

One thought you may want to look into if you do your own business is build a model for virtual computer repair. I know you can't do all repairs virtually, but I think that may be a good market to get into, and then you do not have to keep local. Just a thought.

I agree not to start a partnership with your friend. It will complicate and possibly damage your relationship. If anything let him mirror your business model and let him create his own. You can then refer work to each other if needed and help each other that way.

Good luck on your venture.