Tips for Entrepreneurs Just Getting Started
Your Bank Account
The first thing you need to do, after registering your business with the state, is open a bank account. It is best to have an account separate from your personal account.
Open a business checking account first, then a savings account to put aside money for taxes. Many entrepreneurs start with putting 25% of their income aside.
A business credit card will help you start building credit, which will be important for acquiring funding in the future.
Bookkeeping starts with the accurate tracking of money going out. It helps you keep track of growth, build financial statements, stay on top of deductibles, get your tax returns ready, and prove what you say in your tax filings, should the need arise.
Make sure to hold on to all receipts related to meals and entertainment, business travel, expenses related to your vehicle, gifts and home office expenses.
Tax obligations depend on the legal structure of the business. Self-employed (sole proprietorships, LLCs and partnerships) claim business income on their personal tax returns. Corporations are separate tax entities, taxed independently from owners. You are taxed as an employee for your income from a corporation.
Self-employed people need to withhold taxes quarterly and remit them to the government in lieu of an employer’s withholding.
Home-based businesses keep overhead down, and qualify business owners for special tax breaks.
Bookkeeping is the day-to-day process of recording and categorizing business transactions and reconciling bank statements.
You can go the DIY route, or hire an outsourced or part-time local or cloud-based bookkeeping service. There are many local bookkeeping companies in most mid-size to large cities.
Bookkeepers handle day-to-day administrative duties such as:
- Reconciling accounts
- Recording transactions
- Managing accounts receivable and accounts payable
- Adjusting entries
- Preparing financial statements
- Staying up to date on laws and regulations
- Working with your accountant and tax preparer
Using a reputable professional bookkeeping service has number of advantages:
- You know everything will be kept accurately up-to-date
- You will receive reports on-time
- Your financial information is secure and unavailable to prying eyes
- The service will be focused on meeting your needs
- There will never be an interruption in service
- The service can quickly find and fax or email any reports you need
- Everything will be in order at tax time, or if you should be audited