by Holli S. Powell, CPA
So, you’ve decided to hang up your own shingle—go out on your own. Congratulations! Before you make that first sale or buy your office supplies, consider these three tips to get your finances in order before you start making money. I guarantee, once you get into the swing of your business, you will be so glad you took the time to do this before things got busy.
1. Open a business bank account.
This isn’t technically required but it’s so super helpful to be able to segregate your business and personal expenses easily. Plus, it will come in very handy with tip #2. Many banks and credit unions offer free or low-fee accounts for small businesses. Check with your bank before you go to see what kinds of paperwork you’ll need to bring with you!
2. Find an accounting solution that works for you.
I promise you, if you do this within the first month of opening your business, it will save you so much work going in and inputting expenses and income down the road. There are plenty of free or low-cost software programs which are on the cloud, or you can use a more expensive program like Quickbooks (available either online or for the hard drive). Or, if you have a spreadsheet software like Microsoft Excel, just put a quick spreadsheet together to track business income and expenses. An advantage to having a software linked to a business bank account is that you can easily download all your transactions from the bank account (or from PayPal, or both) into your software and save yourself some manual data entry.
3. Talk to an accountant.
This doesn’t have to be a big deal, or a huge cost, but spending a few minutes telling an accountant about your particular business situation will potentially save you tons of headaches or (even worse) taxes and penalties. Consulting with an accountant up front will help you know what types of things you need to be saving, what you can consider deductible, and if you need to begin paying quarterly taxes.
Having a solid foundation of financial understanding from the beginning will make such a big difference and allow you to concentrate on doing the thing you love—operating your business!