Monday, June 06, 2011

Running your own one person company

Recently there was a post on PuneTech on mom's re-entering the IT work force after a break. Two of the biggest concerns mentioned were :
  • Coping with vast advances (changes) in the IT landscape
  • Balancing work and family responsibilities
Since I have been running a one person company for a good amount of time, I suggested that as an option. In this post I will discuss various aspects of running a one person company.

  • You have full control of your time. You can choose to spend as much or as little time as you would like. There is also a good chance that you will be able to decide when you want to spend that time.
  • You get to work on something that you enjoy doing. Tremendous work satisfaction.
  • You have the option of working from home.
  • It can take a little while for the work to get set, so you may not be able to see revenues for some time.
  • It takes a huge amount of discipline to work without a boss, and without deadlines.
  • You will not get the benefits (insurance, etc) that a company would give you.
  • Your finances may or may not show a constant graph.
  • You may have a hard time getting home loans, since most banks (especially in India) feel that employed people are more stable (whatever that means :-) )
  • People may think you are not doing real work (most people have a very skewed notion of what real work means)
  • You will have to deal with distractions, if you are working from home.
Even though the disadvantages outnumber the advantages, qualitatively I think the advantages are vast. I may be a bit biased, but I really think that a 9 - 5 job in a large organization, totally sucks the soul out of a person.

I will restrict this advise to India, whose laws I am accustomed with. You do not need to register any legal entity to run a one person business. You can run it on your own name, you can raise invoices on your own name, and you can file your taxes on your personal PAN number.

Some people may create a sole proprietorship, but that is purely to have a business name and to be able to invoice clients on a business name, rather than your personal name. Besides this, having a sole proprietorship has the advantage of being able to easily separate personal and business accounts. The latter can be achieved simply by keeping a separate savings account for work related transactions.

Some people may also choose to create an LLP. Besides the points mentioned for sole proprietorship,an LLP will shield your personal finances against business losses, lawsuits, etc.

I will not get into the legalities of creating a sole proprietorship, or LLP. My suggestion is to start work on your personal name, and create a legal entity later, if required. You should consult your CA for details of creating a business entity.

Types of work
There are many types of work that can be done as a one person business. I will focus on IT related fields in this post.

Many people make a living by doing freelance projects. You can either get projects directly from clients, or you can work on one of many freelancing websites. These websites publish projects that people want completed. If you feel that you can do the project, then you can bid for it. If you get the project, you will have to complete it in the stipulated time, and with the required features. The payment usually comes once the client is satisfied with the work. Most of these websites allow the client as well as the developer to rate each other. These ratings go a long way in determining whether a client will give you projects. Typically a freelancing website have work related to coding, documentation, website design, etc. Some such websites are: Elance,, FreelanceSwitch, ODesk, and (Disclosure: I will get a small commission if you register on some of these websites, following the provided link)

Regardless, of whether you get projects from a freelancing website, or on you own, you should always have your own website, and a blog. I cannot stress how important it is for a freelancer to have a blog. Your blog is the place where potential clients and friends get a glimpse of the real you. It is also your showcase for projects completed, and an online portfolio.

Contract programming:
If you have been in the software industry for a long while, then you probably already have a lot of contacts who would like to give you some contract programming work. This can also be lucrative and fun. In contract programming you typically make a commitment (such as 20 hours per week), and charge on an hourly rate.

If have passion for sharing your knowledge with others, then teaching is a wonderful way to do satisfying work and earn a livelihood. There are various avenues for teaching. You can teach in a local college, you can teach at companies, or you can teach on the Internet. You can also do all of these if you desire.

Some places you can create courses and teach on the web are,, and You can also create your own website for teaching using Moodle, or a similar open source software. I have created my own website for teaching computer science, but I am not yet making any significant revenue from it, so beware before you take it as a role model :-) However, you can check out this website of a database expert who maintains a learning community on his website.

You can also create and sell screencasts like the people at Peepcode, and Destroy all software.

I think there is a lot to be said about teaching, and it probably warrants a separate blog post.

Creating mobile applications:
Many people make a living by creating mobile applications, for Android, iPhone, etc. The amounts vary, but it is very much do-able. Several people give helpful tips and also post there monthly incomes on their blogs. You might find them useful. This is one example website of an independent developer who posts monthly incomes and also gives helpful tips.

Creating stock photos, and designs:
If you are the arty type, you can create stock photos, images, or icons, and put them up for sale on stock photo websites. There are many such websites, and some people are able to make a good continuous stream of income from them. iStockPhoto is one such website. You can also create designs for clients on sites like

Selling websites:
If you enjoy making and selling websites, you can make and auction your websites on

Niche websites:
If you are really passionate about something, and also have a lot of knowledge in that field, then you can share your knowledge on a niche website, and earn revenues from advertisements, affiliate sales, subscriptions, etc. See this blog post on information about building niche websites.

If you have something to sell, you can also set up shop using a hosted e-commerce solution. However, keep in mind that managing logistics, shipping, handling, and customer care may be more than what one person can handle.

I hope you found this post useful. This is a brief list of things that can be done as a one person entity, and some pointers on how to go about doing it. I think plenty more can be said on this topic.

I will try and write further blog posts talking about each of these points in greater detail.


Gauri said...

Thank you Sir.
You have given many possibilities for us. Some comp science students are interested in working on my ideas as their academic projects. Since colleges demand something like project allotment letter, certificate, etc. I think its impossible to sponsor and guide academic project without formal company.

Gauri said...

It would be of great help, if you could give steps to form one person company.

Parag said...

Hello Gauri,

To form a one person company you need to do the following:

- Create a current account in any bank (you may need to register for the shop act for this)
- Design a letterhead

This is all you need as far as legalities are concerned. Besides this you may also want to create a website which mentions your area and focus of work.

Gauri said...

Thank you.

Anonymous said...

Hi Parag !

I just happened to reach ur blog while searching for something else ... Very good info ... I am a senior professional just got out of hectiv multinational job and planning to work on contract for upto 20 hours per week ... for Indin or US company .. in fact looking for people who can get me work on commision basis... Would like to talk with you in this regard as u seem to have so much info .... Can u pls share ur cell number or email address os that i can contact u ? Thnx - MSS

sushmita_directdilse said...

Hey parag, information provided by u is really helpful..thanks for posting.U can visit my blog sometimes... break k pehle wali mom.....about to leave job..wondering wat to do and wat not....

Parag Shah said...

Hey Sushmita, Thanks for leaving the comment and good luck ...

InsanityBroadcasted said...

Amazing article. Really inspirational for wannabe freelancers and future entrepreneurs. Thank you so much for providing insight on such an important topic. This blog surely gives out answers to many wheres and hows..

Nikita said...

Thanks Parag, well thoughtful article. Very much helpful for the newbie like me. also today I came across one of the blogs which cleared most of my questions regarding starting a business.

Thanks again,

Nhà Đất Xinh said...

Bạn đang muốn mua nhà , đất hoặc đang muốn bán nhà , đất thì hạy đến với chúng tôi , chúng tôi sẽ mang lại cho bạn những dịch vụ tốt nhất và hiệu quả nhất gồm bán đất quận 12, bán nhà gò vấp, bán nhà quận 9, bán nhà thủ đức, bán nhà tân phú, bán nhà bình tân, và toàn quốc . Bạn sẽ hày lòng về sự lựa chọn của mình. Chuyên in các loại thiep cuoi xinh, thiệp cưới đẹp giá rẻ, loi chuc dam cuoi hay, loi chuc dam cuoi y nghia dành cho các đôi uyên ương trong đám cưới.

K Amit said...

I agree upto some extent.
its not 9-5 job. its 9-9 job in mnc's.
but in initial part of career it is a good idea to get MNC exposure and also save some little amount. its not easy for every fresher to work alone patiently.

All the best to you.

Manisha sahu said...

Hi Parag!!
It was a great stuff and it will definitely help me a lot.
I am interested in such kind of works.
I have accounts in Bidvertiser,freelancer,clixsence,Toluna,Blogger and so on. but I am not getting what i actually can because of lack of guidance in online stuffs.
It will be a great help from you if you just elaborate at-least one or two real valuable online work please.
I will be very grateful to you and surely many of your blog readers too.

Khắc Hoàng said...

Địa Ốc Vạn Xuân là tập đoàn bất động sản quận 12, đầu tư xây dựng nhà đất quận 12bán nhà quận 12 giá rẻ, bán đất quận 12 giá rẻ,.. liên hệ hoangpro716 để được tư vấn các dự án mới nhất thích hợp đầu tư nhất.