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How To Start A Software Company

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By: Scam Risk - Expert Reviewer

How To Start A Software Company: Easy Way To $10K?

Modern society relies on software so heavily that people and companies cannot function without it.

These programs will need to be maintained, distributed, created, and maintained. Software development companies do this work.

Software development is a huge and strong industry. IBISWorld estimates software publishing industry revenue at $238 billion per year and growth rate at 3.9 percent. Over a half-million people are employed in this industry.

Towards the end of this article, you’ll find answers to some of the most frequently asked questions on how to start a software development business…

But most importantly, you’ll see the exact system many others have used to build their own internet marketing business to over $40,000 a month in mostly passive income.

Table of Contents

Start A Software Development Business By Following These 10 Steps:

After selecting a business idea you feel is right for you, it is now time to take the next steps. It is not enough to register your business with the state. Opening a software business involves a lot of other important steps that can’t be overlooked.

This is a simple guide for starting a software development company. The following steps will help ensure your business is adequately planned, legally compliant, and registered.

Step 1: Plan Your Software Business.

Writing a clear software business plan is crucial for entrepreneurs looking to succeed in this industry. This will allow you to gain a more comprehensive understanding of your business and uncover some possible opportunities. Here are some essential points to remember:

What Is A Software Company?

Software companies are businesses that focus on creating new products and services using the latest technology.

Software developers from these companies often specialize in areas like programming, system services, and software-as-a-service (SaaS).

Software companies generate their revenue from subscriptions, maintenance and support, software licenses, and other services. They use a lot of cloud technology to provide customers with easy access to transactions.

What Are The Startup Costs Involved In Opening A Software Development Business?

Software development companies can be expensive. Investing in venture capital funds, for example, is one of the costs involved with starting a software development company. Typically, the money that is invested in a company goes towards the following:

  • Hosting costs and data storage fees
  • Projects may require specialized programs
  • Copyright, trademark, and patent fees
  • Additional employees and contract workers

Variation in startup costs can be attributed to the number and type of contract workers hired. Workers can speed up development, but they also increase costs.

Paul Jarvis’ success of OfCourseBooks shows how you can start a successful business with little money. Jarvis and his team spent $1125 on startup costs. Funds were used to purchase a website, specialized fonts, and stock photography. Legal fees were also paid.

John Sung Kim’s company took a different approach, obtaining a $40,000 investment in the beginning before developing a call center software program.

What Are The Ongoing Expenses For A Software Development Business?

There are many ongoing expenses that a software development company must pay.

OfCourseBooks requires $45 to maintain, while Microsoft Dynamics 365 is more complex and requires more servers and staff, thus having higher operating expenses.

So the real answer here is that their are too many variables at play. It all depends on your product offering.

Who Is The Target Market?

A company that develops software can target almost any market, but it must be well defined. Businesses need to understand the specific needs of their target market and how a program can address those needs. Hence, entrepreneurs are encouraged to conduct market research to achieve this.

How Much Can You Charge Customers?

There are many options for how much computer software costs. Many simple apps cost just a few bucks or are free. Complex enterprise solutions may cost thousands of dollars. 

You can take, for instance, Angry Birds, which initially cost $0.99 to 2.99. Now it is free. Microsoft Dynamics 365 can be as low as $190 per user per month.

What Will You Name Your Business?

It’s important and challenging to choose the right name for a business.

If you own a sole proprietorship, it is possible to open a business under another name than your personal name.

when registering a business identity, check out these resources to help you find the right business name for you:

  • Business records for your state
  • Federal and state trademark records
  • Social media platforms
  • Web domain availability

It is vital to protect your domain name before others do.

Step 2: Form A Legal Entity.

Some of the business structures that are commonly used include sole proprietorships, partnerships, limited liability companies (LLC), and corporations.

If your software development firm is sued, you can avoid personally being liable by forming a business entity, such as an LLC or business corporation.

You can create an LLC independently and only pay the state filing fees or hire an LLC Service provider. Additional fees may apply.

Step 3: Register For Taxes.

In order to start a business, you must register with multiple federal and state tax authorities. To register for taxes, you must have an EIN.

Small Business Taxes

There are many options available for taxation, depending on what business structure you choose. An example of this is an LLC that could be taxed as an S Corp.

Below are a few guides to help small business owners learn more about taxes:

  • LLC Taxes
  • Sole Proprietorship vs. LLC
  • LLC vs. Corporation
  • S Corp vs. LLC
  • How to Start an S Corp

Step 4: Open A Business Bank Account & Credit Cards.

It is crucial to protect your personal assets by opening dedicated credit and bank accounts for business purposes.

Mixing personal and business accounts places your home, car, and other assets at risk. This is known in business law as piercing your corporate veil.

Furthermore, learning how to build credit for your business can help you get credit cards. You can finance your business with other funding in your company’s name (instead of your own), higher interest rates, better credit lines, and many more.

Step 5: Set Up Business Accounting.

It is essential to record all expenses and income sources to understand your business’ financial performance. Your annual tax filings will be much easier if you keep accurate and detailed records.

Step 6: Obtain Necessary Permits And Licenses.

Failure to obtain necessary permits and licenses can lead to heavy penalties or even the termination of your business.

State And Local Business License Requirements

A license or permit from a state may be required to operate a software development business. Find out more about licensing requirements in your area by visiting SBA’s reference on state licenses and permits.

Get information about local permits and licenses:

  • You can check with the county, city, or town clerk’s office.
  • You can get assistance from the local associations listed in the US Small Business Associations directory of Local Business Resources.

Certificate Of Occupancy

An office is typically used for software development companies. Often, Businesses that work from a physical location need a Certificate of Occupancy (CO). A CO verifies that all building codes and zoning laws are met.

If you want to lease a site:

  • It is usually the landlord’s responsibility to obtain a CO.
  • Before leasing, confirm with your landlord that you have or can obtain a valid CO.
  • A new CO is required for major renovations. A valid CO must be issued first before lease payments begin, as stated in your lease agreement.

If you want to buy or remodel a place:

  • You will need to get a valid CO issued by a local authority.
  • For software development businesses, it is essential to check all relevant building codes and regulations for the area where they are located.

Step 7: Get Business Insurance.

Insurance is essential for your business to operate legally and safely. Your company’s financial security is protected in the case of a covered event.

Many insurance policies can be used to protect different types of businesses and various risks. General Liability Insurance can help you determine the risks your business faces. This coverage is what small businesses most commonly need. It’s an excellent place for you to start.

Another crucial insurance policy that businesses require is Workers’ Compensation Insurance. In most states, workers’ compensation insurance is required.

Step 8: Define Your Brand.

Your brand is your company’s identity. Your business image also depends on how the public perceives it. A strong brand can help you distinguish yourself from other companies.

How To Promote & Market A Software Development Business

Software development companies usually market their programs online through websites and other platforms. Based on the business’ programs, which platform is best for them depends on their business. A company that offers spell-checking services for legal documents may not be interested in marketing in the same location as a gaming platform.

How To Keep Customers Coming Back

Software companies’ programs should work flawlessly, or customers may switch to better-designed and more intuitive programs. This is why testing and debugging should be done quickly.

Step 9: Create Your Business Website.

Once you have defined your brand and designed your logo, you will need to make a website for your business.

Some people may be afraid of creating a website, even though it is an important step. Although this was a reasonable concern back in 2015, it has become much less common in recent years.

These are the main reasons to build your website now:

  • Websites are a must for all legitimate businesses. It doesn’t matter what industry you’re in or what your business is when you launch online.
  • Facebook pages, LinkedIn business profiles, and social media accounts are not meant to replace your business website.
  • Websites can be created in minutes via website builder tools like the GoDaddy Website Builder.

Step 10: Set Up Your Business Phone System.

Having your own business phone line helps keep your personal and business lives separate.

Aside from helping you automate your business, it also gives it credibility, and it makes finding and contacting potential customers easier.

Entrepreneurs can choose from a variety of services to set up their business phone system.

Is This Business Right For You?

There are several types of workers in the software development industry, but most business founders are creative thinkers who have the skills to bridge logic and creativity. Programming requires a strong command of logic, of course. But creating an innovative software program, however, takes creative thinking.

FAQs

How Much Does It Cost To Start A Software Company?

Software company startup costs start anywhere between $30,000 and $150,000 depending on the size of your business.

How Do Software-as-a-Service Companies Make Money?

Typically, SaaS companies generate revenue through subscription fees, so ensuring the correct pricing structure can increase revenue. Some companies take a seat-based pricing approach, and others that use usage-based pricing.

How Much Do Software Company Owners Make?

Software Product Owners in the United States make an average salary of $137,378 per year. According to PayScale, the lowest salary for a Software Product Owner in the United States is $80,172 per year.

How Do Companies Develop New Product Ideas?

A product idea can be brought to market with the following framework.

  • Idea generation.
  • Research
  • Planning
  • Prototyping
  • Sourcing
  • Costing
  • Commercialization

What Is An MVP In Software Industry?

An MVP is a method for developing new products or websites with sufficient features that early adopters can enjoy. Only the feedback of the initial users can be used to design and develop the final product.

Is Kaltura Inc An Israeli Company?

Using video content management software, Kaltura helps organizations manage their video content and has raised $50 million from investment bank Goldman Sachs. It plans an IPO soon.

What Is SaaS And How Does It Work?

SaaS is a software distribution method that allows data accessibility from any device with an internet connection and a web browser. This web-based model is managed by software vendors who host and maintain the servers and databases and the code that makes up the application. A cookie policy is used in the SaaS environment to offer clients a better user experience.

What Is Our #1 Recommendation For How To Make Money In 2021?

Our review team has come across a program in the real estate industry that is next level!

Although it’s not real estate in the traditional sense, it’s all digital.

Yup, Digital Real Estate!

With this digital real estate program, you can have the ability to completely walk away from manual labor!

Sound too good to be true?

Of course it does!

But it isn’t…in fact, business owners wish they had this skill!

All you have to do is build and rank a website and forward the jobs off to a business owner in town, you could even email it to them!

This works for literally any service based business, tree service, plumbing, towing, etc. 

How Do You Get Paid And How Much?

Simple, after you forward the jobs off to a business owner and he makes some money off of them, you simply ask to make the deal beneficial for each other.

A fair price to charge per lead, depending on the industry is 10-20%…let’s just use the tree service industry for example and go by worst case scenario.

Let’s say you build and rank the site and only 20 jobs a month come in. The average tree service job is anywhere from $500-$2000!

That means at bare minimum you have an asset worth $1000 a month!

See why they call it digital real estate now?

That’s a rent payment. 

The great thing is how easy it is to scale. You don’t have to answer the phone…all you have to do is get the phone to ring.

Unlike the passive income ideas I mentioned earlier…

This one actually allows you to collect that without working in a brick and mortar business all day.

Truly passive income!

The training program takes making money online to a whole other level. The owner of the program walks you through how to build and rank a site hand in hand, with the occasional voice over when he is sharing his screen.

You will learn the importance of keywords, website name, how to send call notifications via email, backlinking, etc.

Once the training program is completed you will also have access to a Facebook group where you can ask questions and be in a community with others on the same journey as you.

Digital real estate allows you to have passive income with most of your day being spent OUT of the brick and mortar landscape.

Now, I know you probably have tons of questions… So, check this out to learn more.

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