The software industry is a billion-dollar industry that was worth about $520 billion in 2021, more than double the figure four years ago.
Many organizations today rely heavily on software programs to run their business operations. That means software programs must be created, distributed, and well maintained—that’s the work of a software development company.
With billions of dollars in annual revenue, starting a software company can be lucrative. But how exactly do you start this business?
If you want to launch a successful software company, write a clear business plan. A clear plan outlines your business structure and uncovers impending obstacles. You’re 2x more likely to scale your business when you have a business plan in place.
Here’s what to cover in your business plan.
Once you complete this step, you’ll have a clear business framework.
Do you want to form a limited liability company (LLC), a corporation, partnership, or a sole proprietorship?
Choose a business structure for your software company (Form a legal entity) that suits your needs and those of your customers.
A limited liability company separates you from your business. So, if your business is sued for misconduct or another thing, you’re not held personally liable.
Apply for an Employer Identification Number (EIN) from the IRS before you open your software development business. Do so and register for taxes.
Your business will be taxed by the IRS depending on its structure and size. For example, if you open a limited liability company, expect to be taxed as an S corporation.
State and federal taxes will also apply to your business, so take time to find out what these taxes are before you can proceed to the next step.
Defining your brand helps your software company stand out from the competition.
Clearly state what your company stands for and influence the public’s view of it. Be sure to define your brand positively to help spread awareness. One way to promote your brand and market your business is to create a powerful logo or a website and attract prospects.
To design a great website for your business, hire a professional website designer. If you’re short of money, you can apply for a short-term loan to ease your burden. Use search terms like "title loans online" or "car title loans" to find affordable loans with quick approvals.
Open a bank account for your business (separate from your personal account). This is one way of protecting your assets in the event your business is sued.
Mixing your personal and business accounts means risking losing your assets, including your car, home, and other valuables. In addition, opening a separate account for your business makes it easy to account for income and file taxes.