How To Build Passive Income

A lot of people get stuck because they think that to make money, you have to be doing something new every day. You have to launch a new business or invest in a ton of products with expensive up-front costs.

That’s not what I call making money.

I call it investing. And I believe there is an incredible way to invest in this economy so that we can all make consistent income.

What are these investments? They’re things like offering your services at cost for other people to use, renting out your own house, producing your own content, and sharing those resources with the world.

These types of activities don’t require lots of initial investment. In fact, some of them will even produce revenue months after you done performing them. (For example, writing gets you access to your own personal publishing platform.)

Investing isn’t about getting rich quickly - it’s about keeping yourself engaged, staying productive, and creating sustainable wealth over time. It takes consistency but can easily reap big rewards if you work hard at it.

Create a business plan

how build passive income

A few years ago, I would have told you that creating a business is enough to focus your attention. Now, I’d tell you it’s not. Creating a business requires significant amounts of time beyond just working for income.

You need to research what industries are under-served, how you can fill those gaps, and then find ways to profit from them. You also need to spend time developing your product or service and promoting it so people know about it.

And all this must be done while keeping an eye out for competitors who may try to take away market share by offering similar products or services.

Fund your business

how build passive income

A successful entrepreneur is one who builds their business up from within. They create products or services that they are passionate about and then look for ways to get people to pay for them.

By offering these things as freebies, they will eventually be paid through word of mouth alone!

Starting off with a low cost product or service can make it very profitable in the long run.

There are many ways to fund your online business without using too much money. You can do t-shirt designs, blogs, YouTube channels, social media, and more.

Whatever you choose to invest in, don’t spend a large amount of money at first. I recommend starting out spending around $100 per month unless you have way more than that.

That’s what I spent my first year investing in my business! And now I am a full time digital nomad income source.

I was able to save enough to live off for several months while I built my business up.

Pick your business location

Choosing your business’s location is an integral part of starting and running your business. Finding a good area to launch your business will depend mostly on two things – how much money you have to invest in your business and what kind of income you want to achieve with it.

If investing heavily into your business isn’t really your thing, you can always start off by taking on less expensive areas first before moving onto more costly ones. This way, you won’t lose too much capital!

The second important factor is deciding if you want your business to make big profits or small but steady incomes. A business model that makes large amounts of profit usually takes longer to get going than one that relies more on repeat customers for revenue.

Choose a business structure

how build passive income

The choice of business structure will heavily influence how you run your business, and what kind of income you earn. There are five major types of businesses, with different levels of complexity.

Sole proprietorships or “I” lllans are typically the easiest to set up, requiring only you as an owner. As the name suggests, this is one individual running the business.

A partnership is two or more individuals who share in either profits or losses, depending on whether they agree to contribute equal amounts.

Companies offer limited liability for shareholders, which means that legal responsibility for the company is legally transferred onto its owners — and not onto someone outside the organization.

LLCs (or Limited Liability Companies) have similar protections as companies, except each member of the LLC must be personally liable for any debts incurred by the entity.

Trusted employees can also be included within the protective umbrella of a corporation, community organization, or other LLP. This way, even if one employee is terminated due to bad performance or misconduct, the rest of the members of the organization are protected from lawsuits.

Choose your business name

how build passive income

Now that you have determined what you want to do and have an idea of how to go about it, your next step will be to choose your business name! This is arguably one of the most important steps in starting your journey as an entrepreneur.

After all, this is what people will know you as. Your brand is an integral part of creating awareness for your business and understanding the power of branding.

Your business name should be catchy, tell someone something about yourself, and position you properly as an expert in your field. Make sure there are no trademarks being used by another company (this can cost you a lot of money!).

We recommend using our free tool to find your ideal business name.

Register your business

how build passive income

The next step in building wealth is registering your business! This includes choosing a business structure, determining if you need to hire employees, establishing trademarks, etc. Depending on what type of business you are starting, there are different regulations that must be met.

There are four main types of businesses people choose to start- sole proprietorships, partnerships, LLCs (limited liability companies), and corporations. Each one has their advantages so it is important to know which one works for you before picking your niche and getting started.

Business owners usually begin with the first option – being an individual owner of the business under his or her name. But as we discussed earlier, this isn’t the best way to go about investing in yourself.

By owning a company instead of just you, you create more opportunities for growth and success. You can take on additional debt or invest heavily into the business, but not personally liable.

This is why the second choice – partnering with others comes along. By sharing the risk together, each partner takes on less responsibility when things go wrong. These partners get paid depending on how well the business does, keeping everyone happy and motivated.

The third option is creating your own limited liability company (LLC). This is similar to a partnership, except individuals cannot share in the profits. Only members of the LLC can, making it more private than a regular business.

The last option is opening up a corporation.

Get federal and state tax IDs

how build passive income

It’s very important to have proper documentation for your business, including any Tax ID numbers you may or may not know about.

Most businesses require an Employer Identification Number (EIN) in order to operate. An EIN is like a social security number for your business.

Business owners are given this number when they apply as an employer with the IRS – but it’s not their own personal one!

Instead, it identifies them as an employee of a company which pays payroll taxes. This way, the government can track how much money each person at the company makes, and determine if they owe back income tax.

By having an official document that says you’re an employee of a company, they also have permission to do things like take credit card receipts from work and process them as corporate expenses. Plus, they must file employment forms such as W-4s and 1099s using the employer’s name instead of yours.

Finding out what these things are requires looking up your job title, and sometimes your employer online or by talking to other people who work there. The last thing you want to do is spend hours trying find something and get no response, then learn you don’t have access to your OWN internal documents because YOU ARE THE OWNER OF THE BUSINESS!

Gone are the days when someone else could help run your business for you.

Apply for licenses and permits

how build passive income

Before you can start investing in real estate, you have to be licensed or certified as an investor. There are over 30 states that require some level of licensing or certification before people can invest in property. These include things such as being at least 18 years old, having a valid driver’s license, and proof of sufficient income.

Many entrepreneurs gain experience by buying a few houses either as investment properties or personal residences. By owning a house, you now have a place to call your own which can be used for business or sleepovers.

There are many ways to acquire this licensure, but most involve taking courses or attending meetings to verify one's qualifications. Most state governments publish their requirements online so it is easy to find all information.

About The Author

Tiara Ogabang
Tiara Joan Ogabang is a talented content writer and marketing expert, currently working for the innovative company With a passion for writing and a keen eye for detail, Tiara has quickly become an integral part of the team, helping to drive engagement and build brand awareness through her creative and engaging content.
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