Starting a Computer Business?
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  1. #1
    ********** |ceWriterguy
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    Post Starting a Computer Business?

    Back in the day, I ran a my own computer business called Rent-A-Geek Onsite Computer Service. In starting it up, I encountered several things which might be of interest to others, so here they are, and their solutions:

    Naming Your Business
    You need to pick a name for your business. It can be simple like 'Bud's computer service', or catchy like 'Rent-A-Geek', or professional sounding like 'CompuTex'. The biggest thing about it is that it has to be unique to your area. To find out if your business name is unique, go to your local county courthouse, in the county clerk's office, and ask to see the registry of business names. Usually the clerk will look it up for you, but sometimes there's a moldy smelling book she'll place on the counter and let you thumb through. All names are alphabetized. If your business name is unique, you can register it with the county clerk for a small fee (in Texas it was 10 bucks) and no one will be legally permitted to use that business name in your area for 5 years. Remember that 5 years if you're planning on running your business for a long time - you'll need to re-register it at the end of every 5 years. If you plan on running your business in multiple counties (IE: an onsite computer service covering several towns across 5 counties like mine was) you'll need to register the name in *each* county.

    Taxes
    Yes, the government will want its take of your business activity as well. This segment will teach you how to acquire a sales tax license, collect and account for taxes, when to tax and when not to tax, and about the wonderful tax number.

    Sales Tax License
    Take a trip down to your local tax assessor-collector's office. It may or may not be in your county courthouse or city hall. There will be some short forms to fill out regarding the name of your business, it's operating address (your office or home office), telephone number, and type of business. This license costs nothing in Texas, but that might vary from state to state. When you get the license, the clerk will tell you about when and when not to collect sales tax, and how to calculate it. Again, if you operate in multiple counties, get information for *each* county you operate in, the sales tax formula may differ. The license, however is statewide, so you'll only need one.

    Collecting and Accounting for Taxes
    The clerk will also provide you with little 'cheat cards' to carry with you, or keep at your register, showing the local formula for calculating sales tax. In my county in Texas, our local tax rate is 8.25%, so any taxable item I sold in my county had to be marked up by that amount. For those of you who are mathematically challenged, take the cost of the item * 1.0825 and you're doing just fine. Again the syntax is (cost * 1.(yourlocaltaxrate) ).

    In accounting my taxes I kept 1 hardcopy of each job order / receipt I gave the customer, and kept those in a file in my briefcase. I also kept (attached to the job orders with a paperclip) the originals of ALL purchase receipts associated with that job - gas, meals en route, and parts are all part of the job - not all are taxable, but all are tax deductable, which we'll get into in a bit. I also kept spreadsheets - one showing revenues only, broken down this way: Rows were job numbers, columns were (respectively) labor, parts, tax county 1, tax county 2, tax county 3, etc. In addition to this I kept a database of each job - client's name, address and phone number, parts purchased for that job, what the customer paid, and a small blurb on what I did.

    When and when not to tax
    Sales tax is only charged on material goods sold and associated services. Consulting fees are not taxed. This means that if you have to replace a part in a customer's machine (like a modem replacement, etc.), you tax both the part and the labor you charge, but if that customer didn't need a part (like a virii recovery or teaching them how to run disk cleanup/defrag), it's a consulting job, and your labor is tax free.

    That WONDERFUL tax number!
    The last thing you'll receive from the clerk when you apply for your tax license is a tax number. This number is your best friend when you have to run out to buy a new hard drive for the client's machine you're working on. Since that part is intended for a client and not you, it's tax free to you. Tell the salesperson at the parts store at time of checkout that you're tax exempt on that purchase, give them your tax number, and get it tax free!

    While we're on taxes
    A couple of things that you will love about owning your own small business (besides the phenominally awesome power of being the boss!) First off, give up on ever doing your taxes for yourself again while you own the business. Find a reliable CPA local to your area to do them for you. Come tax time load up those files of job orders and receipts you've been saving (here's where they pay off) and take them to your CPA. They'll love you because they can do wonderful things with them - for the first 5 years your business is legally allowed to show a LOSS, and I promise your CPA will do their best to make sure you do so if they're worth their salt. 100% of every business LOSS is 100% tax deductible! Enjoy your tax shelter and the nice phat refund it brings you.

    Some things you might consider that will help your CPA find that loss for you:
    If you run your business from your home, and you have a *dedicated office*, you may deduct renting the cost of that office - this means your business is paying you rent for the space - write yourself a receipt. Dedicated office means it's not used for any other purpose - so take that spare bedroom and convert it already!

    If you use your home computer in your business, sell it to yourself! Write that receipt for the Original cost of the computer. Since you own the business, if you ever close down, go bankrupt, whatever, the computer reverts back to you. Better yet, consider renting it from yourself... Just be sure and do your paperwork on that computer.

    If you use your car in your business (like in an onsite computer service) You can do the same thing as you did with your computer. You may also keep the receipts for your car insurance on that car and charge them to the business as well. You may also keep the receipts for gasoline, car washes, etc, and charge them too. Your CPA will think you're a pretty smart cookie. One word on gasoline - it's best done by mileage if you're intending to do this since you don't always use the car for your business and the IRS knows it. Know what your car's gas mileage is, know how many miles you run from office to job site - here's the trick to doing it: Keep a notebook in your car. When you start the car, write down the odometer. When you get back to the office, write it down again. End odometer minus start odometer equals miles you travelled. Divide that by mpg and that's how much gas you can deduct.

    Lunches - You are entitled to deduct the meal you eat during a job IF - you worked 8 hours that day, and IF you were working around lunchtime. The less ethical of us will stack their jobs correctly to show they were working 8 hours whether or not they actually did. The IRS has no way of knowing what time you did the work.

    How much should I charge?
    Not too tough that one, well it is, but it's not - check with your competitors. See what they're charging for their labor. Price yourself accordingly, but a bit less than theirs if you're feeling competitive and that you can live on such a low rate.

    Small Business Administration
    I should have listed this one first, but I got wrapped up in so many other things that it wound up way down here. Your local Small Business Administration has a plethorae of information and resources available to you which will help you start up and run your business. Our local one even runs a free seminar at the local community college which helps you develop business contacts, a business plan, a marketing strategy, and the works. This seminar is required if you ever want to expand your business using loans from the SBA.

    A couple tips and tricks
    Tip 1: In the computer business, it's very easy to get trapped into always having to return to a customer's site and repair their computer for free. To avoid this, make sure you and your customer both understand completely what is to be done before the job begins, and afterward, go over with them exactly what you did. Tell them you'll stand behind the work you did, but if something goes wrong in a different area, you'll have to charge them for it. I used to give my customers 'one free callback' if something went wrong within a week of my working on it. It built very nice goodwill with my customers, even though I usually wound up repairing a few other small things. As long as new parts weren't involved, I didn't charge them for that one callback.

    Tip 2: Always get a receipt for everything! Save that receipt! I had a leather laptop case I used just for my business. One slot in it held a collapsable file folder with a nice velcro'd top that held my receipts, both purchases and finished job orders. Save those receipts because they'll save you $$ later on.

    Tip 3: Document EVERYTHING. Even if you're just teaching grandma where the on/off switch is on the power supply, it carries with it a bit of liability. Make sure you have documented exactly what you did to whom, when you did it, and how much you charged them for it. EVEN ON FREE CALLBACKS DO A JOB ORDER!

    Tip 4: I found, in the time I ran my business, that my job wasn't so much the repair techie as it was the teacher. My customers spent more time listening to what I had to tell them about running their machine cleanly and safely than I actually spent repairing them. They were charged accordingly, at the same rate as my 'repair labor' since it was my knowledge I was selling them. Beware of the 'bubba' conversations - the customer who wants to take an hour after the job's finished to talk about this or that thing computer related. Beware of folks at parties, restaurants, or wherever. Once word gets out that you're not just a techie but a business owner, the world will be beating a path to your door for free advice. Take a note from the doctors and lawyers out there and try not to discuss business outside of business hours, unless you're advertising or signing a new client...

    Tip 5: Advertise! Nobody will call you if they don't know you exist. Place an ad in the classifieds of your local paper, and another in any 'free advertising' publication like 'the thrifty nickel' from my area. If you can afford it, get a bigger ad. Save your receipts, Uncle Sam will pay you back for them next year.

    Tip 6: Try not to use your home phone number or your personal cell number as your business phone number. Get a separate phone if you can swing it. Make sure that phone is manned 24/7. Since you're a small business (meaning you and you alone) I strongly recommend a cell phone. Love your business enough to answer it even if it rings at 3 am!

    Conclusion
    It may seem complex, but it's really simple to start and run your business. How seriously you take it is strictly up to you. Good luck in your endeavours!
    Even a broken watch is correct twice a day.

    Which coder said that nobody could outcode Microsoft in their own OS? Write a bit and make a fortune!

  2. #2
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    Starting your Computer Business Part Two

    These sections were suggested to me by Und3rtak3r, and yes, I should've included them into the original tut. Here goes:

    Job Tracking Methods

    As your business grows, you'll find there's not enough hours in the day to keep up with your customer's demands. You'll want to start keeping a log of 'open jobs' - from the first customer contact with you, all the way through completion. You can do this by a simple spreadsheet or database setup - in the spreadsheet, columns should be job number, status. In the database, code it to sort by the status field - listing open jobs first. I used the spreadsheet method so everything was right in front of me, and used three different codes to show status - open, meaning I just got the job and hadn't started it yet, working, meaning I was working on it, and completed, meaning I was done. I had another field which I never truly used, called 'parts' - which meant for whatever reason the parts or software necessary to complete the job had been ordered but had not yet arrived. As your customers contact you asking when their job will be finished, at your fingertips will be the information you need. Beats the heck out of trying to keep it all in your head.

    Softwares

    A majority of the job is software fixes, be it from virii recoveries, to reformatting/repartitioning the hard drive, to a simple clean up of the hdd. Be sure you have the right tools for the job - I'm quite sure there's MANY other essential softwares out there, but this is what I used to carry with me: Clean master disks of win 95, 98, ME, XP, NT, and 2K (for all those wonderful compaq users who never got one, and others who had OEM versions that just sucked...use their key, use your cd's), and Norton Systemworks. Now back when I ran my business, spyware wasn't heard of and most of my clients used dialup networking from their one computer - nowadays I'd strongly suggest carrying spybot, adaware, hijack this, and the different networking analysis tools available as well. (I actually carried a clean copy of Novell 4.11 and LanAlyzer for those {very rare} networking jobs I had to deal with.)

    The tools, in a nutshell, are your business. The more effective they are and the more effectively you use them, the better off you will be. Learn your softwares!

    On that same note, when encountering a new software package on a customer's machine, ask them to show it off to you after you've finished working - Nobody refuses to talk about their baby when asked! It gives you a chance to explore and learn, and on the occasion that a different customer happens to have an issue with that software, you've got another tool in your box - a basic working knowledge of it.

    A couple more last minute tips

    I failed to mention these earlier, thought of them after I'd already posted, and decided to put them up now -

    Tip 7: Tailor your prices to fit the customer. If it's just a disk cleanup/defrag, charge accordingly. I used to charge $20 per hour with a 2 hour minimum on calls - if I was finished with the job in 10 mins or so, I'd waive that minimum, but only on occasion - if you do it too much they begin to expect it and call you for every little thing. By the way - EVERY call after midnight paid $50 per hour and that 2 hour minimum stood whether or not I finished in 2 minutes or took the entire time - if they're gonna drag me out of my warm bed, it'd better be emergency enough for them to pay me for it.

    Tip 8: Your customer is your lifeline, always! Treat your customers with the utmost respect and for heaven's sake be nice to them and be social! Know that successful businesses depend most on repeat customers and word of mouth advertising. Word of mouth advertising is a dangerous but powerful thing - it can work for or against you. Leave your customers smiling and thinking they got good, honest work from their nice, friendly techie, and watch the calls start pouring in. Leave one angry or undone, and count 10 potential customers lost forever. "and they tell 2 friends, and they tell 2 friends, and so on, and so on..." One of my best paying customers was a sweet little old lady who did missionary work from her computer - printing stuff out and mailing it all over the world. Each time I went to work on her computer (about ever 3 months or so to come clean and tweak) I got to hear all about her grandkids and great grandkids... I still work on her computer today although I'm no longer in the business - and I still hear about those younguns. All totalled during the life of my business, she was responsible for about $16000 in labor alone between working on her machine and the jobs she referred to me. BE NICE!

    Ok, nuff said - be well and good luck!
    Even a broken watch is correct twice a day.

    Which coder said that nobody could outcode Microsoft in their own OS? Write a bit and make a fortune!

  3. #3
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    Very nice, |3lack|ce !

    A couple very small corrections, though

    The “naming your business” part of your tutorial only applies for a sole proprietorship (where you are the sole owner, where you are liable for everything, and where you pay taxes along with your regular income taxes). A sole proprietor must register a DBA (“Doing Business As”) with the county clerk (in Texas, it’s indeed still only $10, and it’s valid for 10 years, not 5 years). Most county clerk offices have all the DBA’s in a central computer (mine were using OS/400… yay!), so looking up your preferred name only takes a couple of seconds. For anything other than a sole proprietorship, you’ll also need to register with the state.

    Taxes: you don’t need to go anywhere for your tax documents. You can go to your state’s website (often, it will be the “comptroller of public accounts”’ office), download the necessary document, fill it out and send it in. This taxes care of sales tax, both city and state. They’ll send you the necessary documents when it’s time to fill them out. I, for example, am paying 6% to the state, and 2.5% to the city. This is sales tax, not income tax. My biggest worry when starting the business was “when are my taxes due? How am I going to now”… no worries there; they’ll make sure you pay them

    And if you'd charge only $20 per hour nowadays, your competitors would probably sue you for unfair competition, |3lack|ce

    Rates around here go from $79 (my rate for on-site; in-store is $49) to over $150 per hour (all those silly franchises.. Geeks-on-call,...)

  4. #4
    ********** |ceWriterguy
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    Thanks for the corrections - I knew I was somewhat dated - wow... 175 eh? hrm.... I've still got Rent-A-Geek registered in my 5 counties... *ponder* Somehow I doubt they'd pay that much though. My closest competitor charges $40. When did they change the registry law to 10 years? It was 5 for me, and I indeed had to look up the name in the moldy book in at least 2 of my 5 counties.

    Ah! The comptroller! /me thwaps himself for forgetting where he got the license which to this day sits on his desk framed with his first dollar...
    Even a broken watch is correct twice a day.

    Which coder said that nobody could outcode Microsoft in their own OS? Write a bit and make a fortune!

  5. #5
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    http://www.tded.state.tx.us/guide/STEP1.html - under Filing the Assumed Name certificate.

    Here are Geeks on Call's rates for TX: $99 for... 15 minutes! http://www.geeksoncall.com/serviceareas/tx.htm

  6. #6
    AO übergeek phishphreek's Avatar
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    Holy sh17! Who in their right mind would pay those rates?!

    I'm going to start a new business called übergeek on Call... then I'll lower my rates by $10 on each service...

    Think they'll try to sue me?
    Quitmzilla is a firefox extension that gives you stats on how long you have quit smoking, how much money you\'ve saved, how much you haven\'t smoked and recent milestones. Very helpful for people who quit smoking and used to smoke at their computers... Helps out with the urges.

  7. #7
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    They're huge... someone must be willing to pay those rates

    Here's a report on their franchises: http://www.entrepreneur.com/franzone...89269-,00.html

    They have 181 franchises... average start-up cost:

    Total investment: $48.4K-77.2K

    Franchise fee: $20K

    Ongoing royalty fee: 11%

    Term of agreement: 10 years, renewable
    I guess that explains why they charge so much

  8. #8
    ********** |ceWriterguy
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    That's just painful and gouging charging 99 bucks for 15 minutes. I couldn't keep a straight face and bill my customers that much.
    Even a broken watch is correct twice a day.

    Which coder said that nobody could outcode Microsoft in their own OS? Write a bit and make a fortune!

  9. #9
    AO Ancient: Team Leader
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    ROFLMAO....

    I had heard of Geeks on Call before but never came across them.... Then this thread came up and on my way home for my midday bout of CS, (it saves the users from death.... ), I pulled up behind a PT Cruiser.... What a POS.... that had these "boys" stuff plastered all over it...

    $99/15 minutes.... What is that all about?

    If I sucker for someone's problem I charge $150/hour driving included... I don't like "outside" work any more..... Their prices are ridiculous.... I have this evil feeling that I should get myself a little bit of spyware and see what they actually do.... then sue their butts when they tell me they did this that and the other and I can prove they did "sheet".
    Don\'t SYN us.... We\'ll SYN you.....
    \"A nation that draws too broad a difference between its scholars and its warriors will have its thinking done by cowards, and its fighting done by fools.\" - Thucydides

  10. #10
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    One good piece of documentation is to have a form with the following.

    Front

    - what the user's issues are
    - a disclaimer stating the user is responsible for backing up data and your not liable lost data, blah, blah. Won't hold up in court but helps in most cases
    - you fee structure, including a minimum to have that computer looked at even if work isn't done
    - a line where you have the person sign agreeing to the above

    Back

    - a section where you list what you've done, how long it took and parts used (the more details the better, especially on a short service call, it looks like they get more)
    - a line where they sign and agree to pay the full amount indicated above

    If you are at a place with a copier it's always good to leave them a copy or send a copy with the official invoice when you get back to your office/home.

    I had a lawyer's secretary complain that I charged a hour for ten minutes at their office plus my travel time. I asked what her boss would charge in that situation. End of convo.

    Make sure the person you get to sign has the authority to spend money for that business.

    Sometimes it's good pr to give the first hour free to new customers and if you are building PCs, give an hour included to set it up and show them how to use it.
    \"You got a mouth like an outboard motor..all the time putt putt putt\" - Foghorn Leghorn

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