There’s so much to do when starting a new business. It can get overwhelming fast. Trust me, I get it. So what are some tips to be sure your biz finances are squared away? Here are six ways you can improve your business finances starting today.
1. Open a separate business bank account.
It’s simple to make business purchases out of your personal account and toss the receipt aside. But mixing your personal and business purchases can really complicate things when tax season arrives.
If you’re a sole proprietor, you can go to your bank and set up another personal bank account using your social security number. For any other form of business, be sure to take your business formation documents, federal ID number, and anything else your bank may require.
Call the bank or check their website for a list of information you’ll need so you don’t have to make multiple trips. Once you have your business account set up, only use it for business purchases.
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2. Set aside funds to pay each quarter.
When you owe money at tax time, that means your business generated a profit! A lot of business owners tend to spend their profit on equipment or other not-so-necessary expenses before the year-end so they don’t owe any tax.
The problem with this thinking is that people end up forgetting why they went into business in the first place! You didn’t work your butt off just to end up being no better off financially than you were at the beginning of the year, did you?
So set aside funds throughout the year to pay in each quarter. Another option is to have it ready when you file your annual taxes. This will make the year-end payment a little easier to handle and will help you fight the urge to spend away the profits on things you may not need.
3. Set a budget.
A budget isn’t something you use or put in place when you’re just getting started or when money is tight. A budget is giving your money a purpose and plan.
It doesn’t matter if you’re barely making the bills or bringing in six-figures. If you don’t put a budget in place for your money, you can easily overspend.
The simple solution is to set an overall budget for the year. Then break that down by month. You should reevaluate your budget, at the very least, every month to make sure you’re on track and adjust accordingly.
A business bringing in six-figures a month can just as easily be in jeopardy from mismanaged funds as one bringing in five bucks. It’s all about your budget and discipline to stick to it.
4. Be your own Chief Financial Officer.
You don’t have to be a numbers person to get your biz finances squared away. I’m definitely not! My secret weapon is learning from those who’ve done it before me.
No one is an expert at everything. The key is to get educated in the areas of business that are the most difficult for you.
The right information, skills, resources, and tools for your business can make all the difference. If finances isn’t your thing, I highly recommend the Be Your Own CFO program.
The Be Your Own CFO program includes access to a CPA and a membership site which includes short videos and guides. Enroll in the Be Your Own CFO program here!
5. Set up a bookkeeping system.
Even if you just have one client right now, putting a bookkeeping system into place is important. It doesn’t have to be a fancy program and in fact, a well-structured Excel spreadsheet will serve most businesses just fine.
When you get into the habit of recording your income and expenses, it makes things a lot easier when business picks up. If you put this off until your business is booming, you won’t have much time to spend on figuring out the best bookkeeping process for your business.
Need help setting up a bookkeeping system? No problemo. I’m with ya! Check out the Be Your Own CFO program which covers bookkeeping support!
6. Chat with my CPA Amy Northard!
Over the years of running an online business, I’ve learned a lot of things the hard way. Through the trial and errors, I learned that building a great team from the very beginning is the reason why Not A Bond Girl is still going strong.
Years ago, when I started in the online biz world, I was determined to save money by doing everything myself. I planned to file my business taxes myself. After all, I had worked at one of the Big Four accounting firms, how hard could it be?
Eventually, I got nowhere trying to learn and do every admin task myself. I got in my own way by wasting my time and energy in the details which prevented me from effectively running the business.
I felt so suffocated at the cubicle and my business wasn’t taking off. I didn’t want to quit without a solid plan lined up (which I have done in the past!) So what’s a girl to do? Something I should’ve done from the Day 1…
I built my support team.
Game changer! This included hiring my current accountant Amy Northard.
The money I saved by having Amy do my taxes ended up more than covering the (very reasonable) service fee of working with her. She even does my personal taxes too!
At the end of the day, my peace of mind is priceless. I never dread tax season anymore! Plus, I don’t have to worry about getting in trouble by the IRS.
How ironic would that be if I, as personal finance blogger (and former Big Four employee), gets fined for not properly filing taxes?
Who would’ve thought that just because I worked at a Big Four firm didn’t mean I knew the ins and outs of filing my business (and personal!) taxes.
For instance, how was I to know that self-employed individuals generally must pay self-employment tax (SE tax) as well as income tax? But now I do!
Btw, SE tax is a Social Security and Medicare tax primarily for individuals who work for themselves.
No matter how talented, driven, or passionate you are, your success as an entrepreneur depends on your ability to build a solid team.
Interested in working with Amy too? Schedule a free chat with her here!