I have my money wiz, Katelyn Magnuson, dropping some finance knowledge for you! Investing in her was one of the best business decisions I made. I’m looking forward to crashing my financials goals with her by my side this year. Take it away Katelyn…
I’ve been helping Miranda handle her finances over the past year and she was kind enough to ask for a little input from me for how you can kick off the new year on your best financial footing yet!
Over the past 10 years I’ve worked with over 150 business owners and have seen it all, the bad write offs, thousands in missed deductions, the books years behind, the audits, and surprise taxes due (even when their accountant had been making quarterly estimated payments) What it keeps coming back to is having someone that understands you and your business and can break information down into actionable pieces for you to be the confident CEO of your business!
Here are my 4 steps for a sure-fire way to have your biz finances nailed like the boss you are!
#1 REGISTER YOUR BUSINESS
If you haven’t already registered your business in the state you live and gotten an EIN (social security number for your business), you’ll want to start there first. For the majority of business owners, I recommend registering as a single member LLC-even if you’re just getting started. I’ve seen annual registration prices range from $100-$250/year depending on the state, which is a relatively low price to pay for the added liability protection that comes with an LLC, and it’s not taxed any differently than being a sole proprietor.
Even if you choose to register as a sole proprietor (or you’re currently registered as one), I recommend registering for an Employer Identification Number (it’s free!). It keeps you from having to hand out your social security number if you’re a sole proprietor, and is required if you register an LLC. Get yours here.
#2 OPEN A BUSINESS CHECKING ACCOUNT
Once you have your state and EIN numbers, you’ll want to open a brand spanking new checking account. I recommend opening a second account at a bank you do most of your personal banking at if it makes sense for you. This is one area that I do recommend using a big bank, as they are supported for online connectivity for accounting and other project management apps much more frequently than credit unions.
At a bare minimum, you’ll want one dedicated checking account, and if it works for your situation, a business savings account for taxes. Then you’ll need to either make a new Stripe and PayPal account, or at the very least update your banking and business name and registration information.
The reason for going through the hassle of opening separate accounts is important. A big part of the protection provided by an LLC actually is rendered useless if you co-mingle your business and personal funds. So open up a separate account and treat your business less like a hobby and more like the thriving business you know it can grow up to be!
#3 PURCHASE ACCOUNTING SOFTWARE
Once you have your business registered and your bank and payment accounts all squared away, the next big step in legitimizing your business would be setting up an accounting software like Wave(free), Xero, or Quickbooks Online (What Miranda uses). Keep in mind, programs like Dubsado, 17Hats, FreshBooks, HoneyBook, etc are not accounting software, but they can be great tools in your business for CRM and project management purposes.
#4 LEARN THE BASICS
Lastly, learn the basics of how to handle your finances until you can hire a bookkeeping professional. Not only is it a good practice to know how your business is doing when it’s in the first few years, but learning how to do your bookkeeping will make it much easier to hire out when the time comes, and will prevent you from being misled by inexperienced bookkeepers.
After searching for a good resource to provide for business owners in their first few years and not finding anything that fit the bill, I’ve created THE go-to course for teaching entrepreneurs everything about the ins and out of handling their finances (And I mean EVERYTHING you need to know) and as a thank you to all of the readers here, I’m offering $100 off the listed course price of $497 with the code THOUGHTFULLYDESIGNED (you pay only $397 and payment plans are available).
Snag your spot just in time to kick off the new year on the right footing and finally feel like your business finances reflect the big places you’re going in life!
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Here’s to Happier Finances and a Kick Ass Year!
Meet My Girl Katelyn: I’m Katelyn, The Freelance CFO! I help clients quadruple their annual income by providing financial expertise, mindset practices, bookkeeping services, budget and income forecasting, and SO much more to self-employed, coaches, consultants, and small business owners.
