News
13 Jan 2021

How to Start an ERP Business From Scratch


Enterprise Resource Planning (ERP) is a term for business software that is used to manage all processes in an organization. An ERP connects every aspect of a business and makes for improved performance and project management. The ERP market is expanding rapidly with the ERP software market alone expected to be worth $18.91 billion by 2024.

For most growing businesses, it’s not a matter of if they need ERP, but when they need it. And with more businesses adding to the already-existing 32.5 million in the U.S., there is a huge market for ERP companies. The ERP business population can be split in two: consulting companies and software companies. If you are looking to tap into the market, here are some tips to get you started on your ERP business from scratch and decide what kind of business it will be.

Choosing the right business structure

No matter which type of company you choose you will need to determine your business structure early on. This is important because the structure will impact how you pay your taxes, how much paperwork you will need to file, and how you can distribute your profits. If starting from scratch then a sole proprietorship will give you complete control and flexibility to run your business however you want. This business structure is also the easiest to set up in terms of registering with the state and filing paperwork. However, the downside is how you will be personally liable for all business debts and legal issues. If your company gets sued, your personal assets will not be protected.

Despite the simplicity a sole proprietorship may offer, other business structures may be better suited for your ERP business. As you will be providing software and advice to a business, you could be sued if something goes wrong due to the services you provided. This is why those starting from scratch may want to look at forming a limited liability company (LLC). And where you set up your company will affect your application process and benefits. Those who form an LLC in Wyoming will enjoy increased privacy, as public filings for Wyoming LLCs do not require members’ names to be disclosed. Moreover, Wyoming allows business owners to form Close LLCs, which makes it easier to pass a business down to the next generation. However, it’s worth noting that LLCs and corporations across states may be subject to higher tax rates. Those who run LLCs in Iowa, for example, can pay up to 12% of their income in corporate taxes. If you are able to choose where to work, choose a state that is business-friendly.

Determining what services you’ll provide

With such a huge market, there are several options you can take regarding the kind of ERP business you can start. But the two most general of these are consulting companies and software companies.