Step 4: Get your books in order asap
As we mentioned in the conclusion of article 3, your finances must become a priority when you have decided to approach entrepreneurship seriously. It will become very important to separate your personal finances from your business. There are several ways to do this. Lets break down the simple straight forward way as well as what you will ultimately end up doing once business picks up.
To put it in simple terms, it can be hard to understand how much money your business will see come in and go out in its beginning stages. Therefore some people choose to begin separating their business expenses by doing something as simple as opening a separate bank account which all business profits and expenses will be deposited and extracted from. This is a very bare minimum way to get yourself started without having to dedicate time registering the business and dealing with the paperwork that comes with starting your future empire! The benefit to going this route is that it allows you to stay focused on whatever it is that makes you profits. Most checking accounts allow you to break down your cashflow very specifically so that at the end of each month or quarter you can go in and see how much money is coming in versus the expenses of the business. This will help when tax time comes around!
For those ready to go all in, you will want to register your business with all appropriate government agencies. This includes one of the first things you will acquire as a legitimate business, your Employer Identification Number (EIN). Applying for this number will let the government know how your business will be structured and how they will tax you at the end of the year. This number will also be used for countless other applications you will require depending on your business type. Ultimately, you will open an official business account with your preferred bank which can bring many benefits with it including a company debit card, official checkbook with your company letterhead. Eventually when the bank starts seeing some income on that account you can expect some offers for an official business line of credit.
As I mentioned in the beginning, you will eventually have to take the next level step if your business succeeds. But you don't have to feel pressured to do it right away. Keep in mind that you can't beat the government so make sure you save your receipts and file your taxes appropriately. If you think you're just going to mix your business money with your personal finances and then pay whatever taxes you feel you owe or even worse not pay at all, you my friend are dancing with the devil. That is a good way to fail as an entrepreneur! Get organized and get those finances sorted. Your future self will thank you!
Next Article: Time to get the word out!
Now that we have our business established, its time to market market market!