How to Start a Carbon Offsetting Business

Carbon offsetting is the practice of purchasing carbon credits for carbon dioxide emissions which, in turn, help fund projects to reduce carbon dioxide in our atmosphere. This practice works to reduce the carbon emissions and carbon footprints of businesses and organizations. In essence, a business “buys out” their carbon emissions by paying a fee, which goes to fund programs and initiatives that work to support renewable energy plans and methods or ways to capture harmful greenhouse gasses, such as methane.

Learn how to start your own Carbon Offsetting Business and whether it is the right fit for you.

Start a carbon offsetting business by following these 9 steps:

You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your carbon offsetting business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Check out our How to Start a Business page.

STEP 1: Plan your Business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

Luckily we have done a lot of this research for you.

What are the costs involved in opening a carbon offsetting business?

As a carbon offset business, much of your work involves calculating and negotiating the payments needed to help fund environmental and energy programs and connecting businesses with informed carbon reduction firms or programs. Your business will operate as a middle man, with no real equipment or labor costs. Carbon reduction firms are mainly paying for the advertising and marketing to make businesses aware of their programs and connections.

The other substantial costs will lie in travel expenses. You and your team may be traveling regularly to inspect and calculate the waste emissions from client businesses.

What are the ongoing expenses for a carbon offsetting business?

Travel expenses are typically the biggest ongoing expense. Advertising and marketing will also feature prominently, especially when first starting as a business. You will also need to continue paying for website hosting and maintenance since this is often your direct mode of contact and engagement for new business.

Who is the target market?

Carbon offsetting businesses must also regularly communicate and partner with the firms and organizations performing waste capture, building and operating green energy solutions, and atmospheric scrubbers and other environmental cleaning techniques. Businesses involved in this industry must also engage with civic and community leaders to promote green energy initiatives. Community support and engagement are critical tools to help sway public opinion and, in turn, affect corporate interests and bottom lines.

How does a carbon offsetting business make money?

Carbon offset companies will collect a fee from the clients they serve. It may be a standard rate or can be based on the overall reductions you’re able to create for the client. There are also nonprofit carbon offset businesses. These businesses may be subsidized through government loans or grants.

How much can you charge customers?

The rates of carbon offset will depend on the calculations of possible and actual pollution incurred through your clients’ businesses.

How much profit can a carbon offsetting business make?

Carbon offset businesses usually collect a percentage fee for their services, based on the carbon offset payment figures. The bigger the offset, the bigger the company revenues. There are also several carbon offset businesses that are nonprofits. They often rely on governmental agencies, programs, and grants to supply revenue.

How can you make your business more profitable?

To increase annual profits, consider forming an energy consulting firm to offer residential and commercial customers options own reducing energy usage and moving toward more sustainable energy sources. Creating local and regional energy committees to examine sustainable energy solutions is another great way to increase visibility and profits.

What will you name your business?

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Carbon Offsetting Business Name Generator

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name, we recommend researching your business name by checking:

  • Your state's business records
  • Federal and state trademark records
  • Social media platforms
  • Web domain availability.

It's very important to secure your domain name before someone else does.

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After registering a domain name, consider setting up a professional email account ( Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your carbon offsetting business is sued.

Form Your LLC

Read our Guide to Form Your Own LLC

Have a Professional Service Form your LLC for You

Two such reliable services:

You can start an LLC yourself and pay only the minimal state LLC costs or hire a Business Formation Service for a small additional fee.

Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

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You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.

Open a business bank account

  • This separates your personal assets from your company's assets, which is necessary for personal asset protection.
  • It also makes accounting and tax filing easier.
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Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.

Get a business credit card

  • This helps you separate personal and business expenses by putting your business' expenses all in one place.
  • It also builds your company's credit history, which can be useful to raise money and investment later on.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate an art consulting business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.

For information about local licenses and permits:

STEP 7: Get Business Insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Learn more about General Liability Insurance.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

STEP 8: Define your brand

Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.

How to promote & market a carbon offsetting business

Create a dedicated online presence. Build an informative and attractive website and regularly update your content. Much of the job of carbon offset businesses is to inform and educate. You not only want customers to know what you do, but you also want them to see where the money goes and the success stories associated with these payments. Testimonials and environmental impact stories should help potential clients to understand why your business is so important and how their own business will benefit in both short and long term goals.

Social media should also be heavily used to connect with a wide variety of individuals and businesses, not strictly clients. Remember, public opinion and sentiment helps positively pressure others to do better.

How to keep customers coming back

The success stories mentioned previously are massively important for drawing in new customers. Equally important is the ability to show the paper trails, from the client to the environmental programs and renewable energy resources being financially enhanced through offset dividends. Additionally, helping to promote your clients by featuring the positive strides they’re making will prove beneficial to your company's long-term success. Remember - your job is to create a symbiotic relationship between environmental concern and action.

STEP 9: Establish your Web Presence

A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.

Start A Carbon Offsetting Business In Your State

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Select your state below for an in-depth guide on completing each of these steps in your home state.

Is this Business Right For You?

To launch a carbon offset start-up, you should ideally understand the science behind carbon emissions and be able to communicate these facts and numbers to potential and existing clients. You should also be knowledgeable and passionate about the numerous programs available or being developed to reduce carbon emissions, excessive methane, and other pollutants.

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Want to know if you are cut out to be an entrepreneur?

Take our Entrepreneurship Quiz to find out!

Entrepreneurship Quiz

What happens during a typical day at a carbon offsetting business?

Carbon offsetting is a business that helps companies and farms reduce their airborne pollution through existing or emerging technologies and programs. Your job will often entail educating your existing and future clients of the programs and techniques available. You may be giving presentations or creating documents to help your clients understand how positive change can proceed. You will also be assessing and calculating your client’s carbon emissions to determine the levels of offset needed to reach or match zero emissions. Additionally, you should be making your clients aware of as many options for reducing waste before carbon offsetting has been enacted.

What are some skills and experiences that will help you build a successful carbon offsetting business?

Because this business revolves around the science of greenhouse gasses and proactive ecological planning, it would be helpful to understand and be well-versed in environmental science and chemistry. Being knowledgeable about your industry and able to speak to others with confidence is important to strengthening support and understanding across the business landscape. Therefore, experience with public speaking will also be a positive trait to possess.

An individual looking to enter this industry should also have a savvy business mind and be able to crunch numbers and offer financially viable solutions to their clients. Business Economics and finance are also strong fields of study for this position.

What is the growth potential for a carbon offsetting business?

Carbon offsetting is a fast-growing and popular business, especially within the industrial business sectors. As tighter emission rules are rolled out, more companies will be looking to improve their outputs. Carbon footprint reduction is important to all levels of businesses, too, so there will undoubtedly become more interest in running clean facilities, no matter the size.

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Take the Next Step

Find a business mentor

One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.

Having a support network in place to turn to during tough times is a major factor of success for new business owners.

Resources to Help Women in Business

There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:

  • Funding
  • Events
  • Guides
  • Support

If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.

What are some insider tips for jump starting a carbon offsetting business?

Consider the following advice when launching your new carbon offsetting business:

  • Conduct thorough business research to make sure you’re not entering an oversaturated market.
  • Regularly attend seminars and training classes to stay up to date on new techniques and materials for maintaining and improving clean energy methods.
  • Advertise heavily through social media with targeted, direct advertising, as well as blogs and regular postings, to grab customer attention.
  • Align your business with local and regional “green” businesses and organizations.

How and when to build a team

Much of the work in this business can be handled by a small team or even a few key individuals. Outgoing, detail-oriented staff are necessary to drive your business. You want people around you who are as passionate about clean air and water as you are.

Next Steps

Get more ideas with our Business Ideas Generator.

Check out our How to Start a Business page.

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