Retirement Business Basics
Licensing, banking, and other logistics
The logistics of setting up a business are nothing new to those who’ve already started working in the gig economy, but a friend who spent his life in the corporate world and who just retired, asked me this:
Could you do a post on setting yourself up for consulting, separate checking account, credit card, easiest legal structure, marketing, billing cadence, 1099 reporting?
Information on these topics are mostly available on the Internet, but my guess is that the request is to understand soup-to-nuts what I did. Here goes!
Single-member LLC
The first question as a retired consultant is whether I wanted to be a sole proprietor or to open a single-member LLC. Candidly, my reason for choosing a single-member LLC originally was that I also ran a photo kiosk business back in 2004. I had a standalone photo printing and CD burning kiosk out in public, first at the Simply Seattle tourist shop in the Pike Place Market and later at a high-end grocery store called Matthew’s at Lakemont. I had some small concern that the business might face some liability if retail customers used the photo kiosk to disseminate controversial material. Given my familiarity with the single-member LLC, I chose to re-establish Hillwork, LLC for my consulting business in retirement.
Technically, with an LLC, the assets of the business are separate from the member’s personal assets. So, as long as there isn’t negligence in some form on the part of the member, there is some legal protection. For a business like consulting, a single-member LLC can be treated as a disregarded entity, so I just submit my income and expenses along with my personal tax return using my social security number.
Of course, to have an LLC, you have to pick a name. You can do a quick business name search in your state. In Oregon, the site is this one: https://sos.oregon.gov/business/Pages/name-availability-help.aspx
I thought I was being clever with the name Hillwork, as it’s a popular term to describe a strength-building phase of marathon training. Unfortunately, when I showed up to the bank to open a bank account, the banker thought I was opening a grading and excavation company. Doh! My recommendation is that you run your name by a few folks before locking it in. This is one I’ve now had for 20 years.
Domain name
I personally bought domain names (hillwork.com, hillwork.net, hillwork.org, hillwork.us) for my LLC back in 2004, and I use a separate email address on one of those domains for my consulting business. In general, having a separate email address for consulting is best practice. An interesting use case is Zelle, as I use a different Zelle address for sending and receiving business payments than I do for personal payments.
The only reason I use my own domain is for optics so contacts aren’t emailing some @gmail.com or @outlook.com email address to reach me. It also helps to prevent errors, as contacts often visit the custom domain to verify they are sending to the right person. I just set up a simple one-page website so that visitors can validate that I indeed am the owner of the domain.
For those interested in what I use, I contract my domains with IONOS (formerly 1&1 Internet). I have the IONOS Expert hosting plan. which works out to about $14 / month after discounts. My plan includes 3 domains, a CDN, and unlimited websites, storage, and databases. In this plan, I’m hosting multiple websites, including a WordPress instance using the free version of the Inspiro theme that I use for hillwork.us.
I used to like having my own domain names for easy use of both Microsoft 365 and Google Workspace within the environments. Truthfully, this doesn’t turn out to really be a requirement, as most of my clients over the longer-term have set me up with email and Slack accounts within their own domains and Google or Microsoft environments (mostly Google) while working for them so that the proprietary information doesn’t linger outside their control.
As such, in this day and age, I view this step of setting up a custom domain as pretty optional for consultants. I just did it a long time ago.
EIN even without employees
Even though I use my social security number to file my taxes, I followed advice to get an EIN (Employer Identification Number) from the IRS anyway. It has actually come in handy in dealing with both the bank and larger companies that prefer to work with companies (and employment agencies) rather than individual contractors. Getting an EIN is a pretty painless process online with the IRS:
Registered Agent
A registered agent is required by the state to receive legal documents and other official communications on behalf of the business. You can be your own registered agent, but this puts your home address out to all the data services. I pay a service called Washington Registered Agent a small fee of $99 per year to be my business address in Oregon. (Yes, my original LLC was in Washington, not Oregon!)
When I first started an LLC in 2004, I didn’t take this step, and I got so much junk mail to my home address back then. I don’t have this issue anymore. Setting up a registered agent was a simple online process, too.
Registering with State and Locality
I had to register my LLC with the Oregon Secretary of State. Again, this was a quick online process.
https://secure.sos.state.or.us/cbrmanager/displayBusinessHome.action#stay
It cost $100 to register and $100/year in Oregon. (Note for businesses that do business in or are organized in California must pay an annual tax of $800 / year, plus an LLC fee that must be paid for income levels above $250,000).
I also had to register my business with the City of Portland. This can also be done online.
Getting a Bank Account and Credit Card
Once I had an EIN and a state registry number, a business bank account and business credit card for a single-member LLC were easy to set up. These separate accounts are really important to keep the business finances separate from personal finances. I personally am a customer of JPMorgan Chase, so I have a JPMorgan Business Checking account, as well as Chase Ink Business Cash credit card. Both have $0 in fees.
The only thing running through my banking account are the payments from clients, the automated payments to my business credit card, and automatic ACH deductions for my office space. I also set up Zelle for ad hoc payments. While I have checks, I am not sure I’ve ever written one for my consulting business.
Bookkeeping
I use a free tool called WaveApps. I am a “Legacy Business” and get the free auto-import of my bank account and credit card transactions from JPMorgan Chase. The new pricing is explained here, and it’s $16 / month for new customers.
I like this tool because it keeps all the tax-deductible business expenses separate and cleanly keeps a record of when I do “drawings” of my consulting income to pay myself or when I do “investments” to pay for business expenses that didn’t go on the corporate credit card.
It also cleanly generates invoices and can automatically send them via email. Through integration with the bank account tracking ACH debits, it keeps track of when invoices are paid. As for billing cadence, I try to do it depending on the client and circumstance. For example, for clients with monthly retainers, I bill monthly. For clients that have lots of contractors and who are used to paying on biweekly cycles, I try to conform to their own accounting practices.
Dun & Bradstreet
One of my consulting clients got acquired by a Fortune 500 company. Moving into their vendor management system (formerly Ariba, now SAP) required that I set up a Dun & Bradstreet D-U-N-S number. It was straightforward and could all be done online, but there was a bit of lead time. Warning is that they are constantly trying to upsell their value-added services, so I finally had to explain to the salesperson that I wasn’t interested in getting their services but that having this number was just required to keep a contract.
Taxes
Not related to the LLC itself but to a whole other set of investment activities (subjects of future blog posts), I have punted on doing my own taxes and started using an accounting firm. I used Quicken and TurboTax for years, even when I ran my LLC in 2004-2005. No more. Since retiring, we just “tee it high and let it fly” for personal expenses. For business expenses, I use WaveApps. I have a tax accountant take care of the filings for federal, Oregon, and City of Portland / Multnomah County.
Once a quarter, my accountant asks me for information to pay estimated taxes. For the LLC activity, I can just run an income/expense report out of WaveApps.
Marketing
I wouldn’t have included this as a section, but my friend asking the question asked me about this. I have to admit that I’m pretty lame in this regard.
The majority of the work I’ve done in retirement has been referred to me by friends and former colleagues. Perhaps I was helped by having others remind former colleagues over social media that I am retired and dicking around as I participate in their programming:
Examples:
Bulent Osman and Shelley Bays had me on their podcast Startup Sensations.
Reggie Wideman had me on his YouTube channel One Minute for Mental Health.
Doug Utberg had me on his podcast People First Leaders
Eric Hannah and Chet Harding had me on their podcast for Amplified Team Training
Anthony Diaz had me on his #PopHealth podcast
Mike Donelly and Doug Davidoff had me on their podcast The Black Line
Keiretsu Capital had me speak at events part of being their Fund IV investment committee
In some sense, perhaps this Substack might be unintentionally doing a bit of marketing, too, as I have been pleasantly surprised at contact from others in my past whom I’ve not done a good job keeping in touch with! By all means, I welcome this contact, as I’m just dicking around anyway! I’m not really looking for work (I’m retired!), but I do get stimulated by hearing from friends!
I hope this helps! Keep the questions coming!