HomeBUSINESSHow Do You Finance The Creation Of A Web Design Company?

How Do You Finance The Creation Of A Web Design Company?

Launching your business as an independent web designer may require seeking funding. There are different ways to finance yourself; they are grouped into two categories: own or external funds. Each method of financing has advantages and disadvantages. Here’s how to finance the creation of a web design business.

Equity And Similar Financing For The Web Designer

Equity financing constitutes funds of internal origin to your company. They correspond to money or goods that you will personally bring. Two solutions exist in this area:

  • The capital contribution,
  • Or the current account contribution.

Finance Your Creation With Capital Contributions

If you have chosen to set up a commercial company to carry out your activity as a web designer, you must define share capital for it. This represents an amount that can be used to pay off your creditors in the event of your company’s failure. Its amount is free, except for limited companies (SA). However, the amounts are blocked and cannot be recovered by the partners, except in the event of a reduction in capital (fairly complex legal operation).

In general, share capital is used to finance investments that sustainably serve you (for over a year). This could be computer equipment, a vehicle, or even professional premises. Two options are available to you:

  • Either you hold such property which you will use for your professional activity: in this case, you can bring it “in kind”;
  • Either you have sufficient personal funds to allow your company to purchase the property: in this case, you make a “cash” contribution.

Contributions in kind follow specific rules. You must evaluate the assets transferred to your company and have your work verified by a contribution commissioner. An exemption is, however, provided for non-significant contributions (no asset is worth more than 30,000 euros, and all your contributions do not represent more than 50% of the company’s capital).

Also Read: Everything You Need To Know Before Hiring A Design Agency

Finance Your Creation With Current Account Contributions

Overall, current account financing works more simply than capital financing. Unlike the latter, funds can be recovered anytime, provided the company’s cash flow allows it. This financing solution offers extreme flexibility. You can :

  • Block the sums of money for a specific time,
  • Provide periodic repayments,
  • Remunerate the funds recorded in the associate’s current account,
  • Etc.

Contributing to a current account is intended to finance current expenses (we also call them operating expenses): creation costs, working capital requirements, etc. Its principle is that you make a transfer or a check payable to your company, which collects the funds and buys the goods it needs or pays its expenses. It reimburses you under the conditions you have planned.

External Financing For A Web Design Company

Bank Loans

You may need more money to finance your project. In this case, you only have one solution: ask a third party. To do this, you must contact banking establishments. In general, they offer:

  • Short-term credits (repayable in 3 years or less),
  • Medium-term credits (repayable in 6 years or less),
  • And long-term credits (repayable in more than 6 years).

Here, your business goes into debt. The funds it receives are intended to finance the purchase of a property. According to a periodicity defined in the loan contract, she becomes the owner and pays annuities to pay off her debts. As you will have understood, the duration of the professional bank loan depends on the nature of the property or the costs financed. For example, a computer is financed over 2 or 3 years maximum… In addition, the bank will ask you to make a minimum personal contribution regarding your project…

Bank Overdrafts And Similar

Two external financing solutions meet very short-term cash flow needs. They can be helpful to you when launching your business. The bank overdraft allows you to spend, for a short period, more money than you have in your professional account. This solution demonstrates excellent flexibility and is used to finance creation expenses as well as the BFR of the activity. Finally, mobilizing commercial receivables allows you to collect your sales invoices more quickly. This technique is only used for invoices issued to a professional. It allows you to reduce your customer payment deadline and improve your WCR.

Long-Term Rentals And Leasing

Financial rental and leasing are alternatives to bank loans. Instead of owning an asset and going into debt to pay for it, your business will lease it and pay finance rents (or leasing fees).

The contract may include a clause offering your company the possibility of becoming the owner of the property at the end of its rental. Their advantage lies in the fact that they do not appear on the liabilities side of your company’s balance sheet. In other words, these debts are only visible after consulting the accounting annex. Their disadvantage is their cost. This method of financing is generally more expensive than the “classic” loan.

Also Read: How to choose A Website Design Company

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