I will Explain what entrepreneurship is, how much it takes to start a business, and the 3 money skills needed to start a business. Entrepreneurship is not just about “creating a company (corporation)”!
What is “entrepreneurship” in the first place?
Entrepreneurship is written as “starting a business”, but there are two main ways to start a business.
- Establish a corporation (such as a joint-stock company)
- Act as a sole proprietor
The first thing that comes to mind when you think of starting a business is to establish a corporation (≒ corporation, etc.).
For example, the establishment of a joint-stock company requires an initial investment of about 300,000 dollars regardless of the type of business. In addition, it takes some time and effort to prepare complicated documents for establishment.
Since it takes money and effort, there is a big merit in establishing a joint-stock company.
One of them is to be able to make all kinds of contracts as a company.
For example, you will be able to rent real estate or sign a contract to borrow money from a bank. This is a big advantage. Let’s think about what is different with the feelings of the lender.
Even if you want to run a business, lending a large office or a large amount of money to an individual involves a considerable risk. Of course, the examination will be strict, and the lender is somewhat uneasy.
But what if you lend it to a company?
When you hear that you “lend a company” an office or a large amount of money to run a business, you feel a sense of security.
This sense of security comes from the fact that you have the money and the ability to spend time setting up a corporation = worthy of credit.
On the other hand, what if you work as a sole proprietor?
A sole proprietor can start by simply submitting a business start notification to the tax office. Although it depends on the type of business, there is basically no need for a start-up fund such as “300,000 dollars” for establishing a joint-stock company. (However, the cost of capital investment when opening a restaurant is not included).
However, as I explained earlier, the social credibility tends to be inferior to that of a joint-stock company because it can be easily opened as an “individual”.
When starting a business, there are advantages and disadvantages when working as a sole proprietor and when starting a corporation (such as a joint-stock company).
Can I start a business for 0 dollars? Two funds needed to start a business
As a tax accountant, I often get questions like this. At that time, I answer, “You can do it for 0 dollars, and some people will cost 10 billion dollars.” Why do some people cost 10 billion dollars to start a business for 0 dollars?
For example, let’s say you open a restaurant (cafe). If you want to set up a store, you may need to cover the land, buildings, interiors, etc. on your own, and if you want to set up a store in a prime location in Ginza, you may need more than 100 million dollars.
But what about freelance photographers?
Some photographers use cameras that cost 300,000 dollars, while others use cameras that cost more than 1 million dollars. If you shoot with your iPhone, the cost of opening a business is virtually 0 dollars.
The tax accountant office I established also started at almost 0 dollars because I used my own computer and printer as my office. In other words, the conclusion is that the amount of money you need will change depending on what kind of industry and occupation you want to start a business with. Therefore, it is important to know how much the business you start will cost.
In this way, it is easier to make the financial plan necessary for starting a business if you consider what occurs temporarily and what occurs continuously.
3 Money Skills Needed to Start a Business You Must Know to Start a Business successfully
Now that you know how much money you need to start a business, you need to know how to raise money next. You also need to learn how to manage the funds raised.
There are three necessary knowledge of money that you need to know so that you will not fail in starting a business: financing knowledge, tax knowledge, and accounting knowledge.
Knowledge of financing (including subsidies and subsidies)
If you run a business that requires an initial investment, you need to learn “how to collect money in the first place?”
In addition, if your business idea is good, it may be sponsored for its future potential.
In this way, learning how to raise funds can help you grow your business faster. If you can hire employees early with the money you borrowed from the bank, or if you can buy a lot of things you need to start a business, you can increase your profits as a result.
Knowledge of taxes
As a tax accountant, I was consulted about money and asked many questions such as “why are you paying taxes”, “when and where and how much tax should be paid”, and “what is the tax paid for?”.
When you start a business, you have to pay various taxes. There are various types of taxes, from the most familiar consumption tax to income tax, corporate tax, inhabitant tax, etc. The amount of tax to be paid may differ between the sole proprietor and the corporation (such as a joint-stock company) mentioned earlier, even if they are equally profitable.
As you can see, the amount of money you have will change depending on whether you have knowledge of taxes or not, so you need to know the minimum required.
Accounting knowledge (money management method)
Do you keep a household account book?
A household account book is a means of managing where your household money comes in (income) and where and what you spend it on (expenditure). Similarly, in a company, clarifying how much sales (income) the company currently has and how much it spends (expenditure) is the starting point for managing money.
Accounting is a procedure for recording, measuring, and communicating the economic activities of a company or business. By studying accounting, you will be able to communicate about how to record money (how to manage it), how to measure value, property status and performance.