Being your own boss and seizing control of your own professional path are both very appealing perks that come with starting your very own business. But in order to succeed, there are a few things you need to take care of when becoming a business owner. Your business finances is one of these, and here are some of its basics.
Open a business banking account
Your personal and business banking accounts should be separate. This may sound like a no-brainer, but there are business owners out there who did not only start out of their garage or basement, but out of their personal bank account, as well.
Not having a separate business account can lead to several complications. It could mess up your audit trail, cause you to miss deductions, make your business seem like a hobby (to the IRS, at least), and your clients might think that you lack professionalism. If you are worried about the costs, though, some banks allow you to open a business savings or a business checking account for free.
Consult an insurance agent
You might already have homeowners or renters insurance and car insurance to protect your personal assets. When you start your business, you should consider protecting your business assets, too. If you have a good working relationship with an insurance agent, you may only need to let them know about the situation of your new business, and they can advise you on what kind of insurance the business will need. For one, having employees will require you to get workers’ compensation insurance and liability insurance.
Hire a Certified Public Accountant (CPA)
As an individual, filing your own tax returns may be simple enough. However, filing taxes as a business owner can feel like you are dealing with endless tax implications and benefits. You might want to consult a professional for this.
CPAs are more well-versed in tax laws than regular accountants and are required to stay updated with the current tax code. They can prepare and sign the tax returns for your business, provide financial analysis and advice on both your finances and taxes, and represent you to the IRS.
Some small businesses might be reluctant about hiring a CPA since it usually costs more than hiring an accountant or a bookkeeper. But you may not have to choose between them. A bookkeeper could handle the daily financial duties, an accountant can prepare regular financial reports, and a CPA can prepare your annual taxes.
Establish financial goals
Some business owners start their business solely with the goal of becoming a multi-million dollar company. Sure, ambition is a great drive to have when opening a business, but you would need to break your grand goal down into realistic, reachable and measurable goals, so you can push your business towards achieving it.
Consider setting up daily, weekly, or monthly revenue goals right from day one. This allows you to stay on track and make the adjustments necessary for your business to constantly grow. Along the way, you can set milestones to hit, as well, so you would have a lot of smaller goals to always aim for. Achieving these little goals can give you the confidence to power through your entrepreneurial journey.
No matter how stiff competition is, building your business on a good and stable financial foundation can boost your fighting chance in your industry. Always keep your goals in mind, as well. Even if you somehow experience a slump, having confidence in your business would make it easier for you to bounce right back.