3 Steps to Getting Your Business Started Off on The Right Foot
You did it. You came up with the idea of the century. This is the thing that is going to change your life for the better, your family’s life for the better. But how do you make sure that you are building your business on a solid financial foundation?
Register your business
Make your business legally official; register your business with your state government. Back in the day, you could expect a lengthy wait in some dreary governmental business to get this done, but now, thanks to the wonders of modern technology, this can be done right from your mobile device (because who has time to stand in line anyways). While you can absolutely go straight to your state government’s dedicated site for this, we happen to love Incfile.com. If you aren’t exactly sure if you need an LLC, DBA or what those letter represent, incfile.com can help you decide how best to legally register and structure your business.
“Why is it important to register my business?”
Great questions. Registering your business as an actual legal entity is a protection for you and your business. How so? If a business is registered as, let’s say an LLC in this instance, then you as the owner, would be protected personally from any claims made against the business. It’s not so fun to think about someone suing your business but it can happen. Legally registering your business helps ensure that even if that happen, your personal funds and accounts, are safe. It’s always better to be safe than sorry.
2. Set up separate bank accounts for your business
As much as you can help it, it’s always a good idea to keep your business funds separate from your personal funds. In the beginning, we get it, most of the money your business actually makes will most likely go towards your personal bills. So having separate bank accounts for your business might seem like a pain but trust us, it’s great to start off this way. Not only does this get you in the habit of keeping your books nice and tidy but it’s fantastic for helping you easily sort expenses vs income to be able to accurately measure profitability.
PRO TIP: Make sure that whatever bank you choose for your new accounts has a “No minimum balance” policy. This is especially important for startups as you’ll most likely be taking most if not all of the funds that come into your business account and transferring them to your personal account so you have enough funds to pay your personal bills.
3. Don’t forget about taxes
That feeling you get when your client pays their invoice and all of that money hits your account, is fantastic. That feeling you get when it’s the end of the year and your tax preparer says you owe thousands of dollars in taxes now…not such a great feeling. Don’t let taxes sneak up on you. It’s tempting to use every dime that lands in your business bank account, but you’ll save yourself a lot of heartache if you leave in what you’ll need for future tax payments.
Not sure how much you should be budgeting for taxes, or maybe you need help with setting up a good expense tracking system, no matter the accounting problem, Daphne A. Johnson, CPA, is here to help. Contact us today for a free consultation.
