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.
Ready to form your LLC? Check out the Top LLC Formation Services.
Start a carbon offsetting business by following these 10 steps:
- Plan your Carbon Offsetting Business
- Form your Carbon Offsetting Business into a Legal Entity
- Register your Carbon Offsetting Business for Taxes
- Open a Business Bank Account & Credit Card
- Set up Accounting for your Carbon Offsetting Business
- Get the Necessary Permits & Licenses for your Carbon Offsetting Business
- Get Carbon Offsetting Business Insurance
- Define your Carbon Offsetting Business Brand
- Create your Carbon Offsetting Business Website
- Set up your Business Phone System
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.
Exploring your options? Check out other small business ideas.
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:
- What will you name your business?
- What are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
Luckily we have done a lot of this research for you.
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
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.
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.
Want a more guided approach? Access TRUiC's free Small Business Startup Guide - a step-by-step course for turning your business idea into reality. Get started today!
STEP 2: Form a legal entity
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
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!
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
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.
Open a business bank account
Besides being a requirement when applying for business loans, opening a business bank account:
- Separates your personal assets from your company's assets, which is necessary for personal asset protection.
- Makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.
Get a business credit card
Getting a business credit card helps you:
- Separate personal and business expenses by putting your business' expenses all in one place.
- Build your company's credit history, which can be useful to raise money later on.
Recommended: Apply for an easy approval business credit card from BILL and build your business credit quickly.
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.
Make LLC accounting easy with our LLC Expenses Cheat Sheet.
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.
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.
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.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
If you already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.
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: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2023 to find the best phone service for your small business.
Recommended Business Phone Service: Phone.com
Phone.com is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.
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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.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
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.
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.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
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:
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.