You’re starting a business to make money, right?
Even if it seems unbelievable that you’ll be able to make a living by doing what you love, the point of being in business is to earn money.
So it stands to be said that it’s important to take care of that money. And setting financial systems in place before you start and while you run your business is crucial.
Here are six items for your financial checklist to keep your business healthy, organized, and fiscally sound.
- Sort Out the Accounts
When you think of hiring an accountant in your personal life, you might think of tax preparation.
And while accountants can certainly help you with that, they can also be very helpful year round for your business.
You can either hire an accountant to take care of the books for your business, or you can purchase a software like Freshbooks or Quickbooks and take care of the accounting yourself.
Accountants cost money, of course, so if you have a knack for crunching numbers and are very organized, you may be able take care of this yourself. If not, it may be best to hire a professional.
- Organize Yourself for Taxes
As a business owner, you have to pay business tax, and your business needs to be registered for taxes.
How much tax you must pay depends on your state. You can find a link to each state’s tax laws here.
Be sure you understand how taxes work in your state and how much you need to pay.
You may want to set up a system to automatically take the taxes off of your income every month so you can stay organized and you don’t owe too much at the end of the year.
- Create a Business Budget
Every business needs a budget.
A budget will help you determine how much money you have, how much you need to spend on business activities, and how much you can take home (your profit).
You can hire somebody to help you build a budget for your business, or you could make a budget yourself with a software or a simple spreadsheet.
Your budget should include the cost of supplies, rent, utilities, advertising and marketing, and any other costs that you incur by running your business.
You can also predict your income so you can project your profits in the future, which will help you stay on track and avoid overspending.
- Decide How You Accept Payments
This might seem like a small, trivial decision, but it can actually impact your business greatly.
You need to decide how you will accept payments for your services.
Are you going to accept credit cards? Personal checks? Will you be offering packages for which the client must pay an upfront monthly cost? If you do accept cards, which payment processor will you be using?
These are all things to consider before you begin to serve clients.
You may find that you land more clients if you accept credit and debit cards, but if you do, you are required to pay a fee to the credit and debit card companies, and you need a payment processor to handle the transaction.
- Choosing a Payment Processor
There are many options for choosing a payment processor, and which one is right for you depends on your business and how mobile your services are.
There are three options that are widely used:
- A web or mobile processor that you can travel with, like Stripe, which doesn’t come with any equipment
- A point of sale terminal like Moneris
- Options like Square, which are completely mobile and come with a card reader.
These will each come with different fee structures and benefits, from electronic receipts to faster payment processing.
Almost all of the payment processors will be linked to your business bank account so the payment is directly deposited.
- Choose the Perfect Business Bank Account
Many new business owners make the mistake to not open a separate business bank account.
If you’re taking out a loan, you’ll have a business bank account, but if you don’t need financing, it’s still a great idea to have a separate business account.
Not only are business accounts generally cheaper to run for your business, but they also keep your personal accounts separate. This is important for accounting and tax purposes, so you can always see where your business financials are going.
While thinking about the financials of your business isn’t everybody’s cup of tea, it’s necessary to have some solid systems in place so you can focus on what you do best: serving your clients.