Ah, the joys of being a new business owner. You have a blank slate and a hundred million things you need to figure out to get your business running smoothly. There are clients to book, websites to launch, and logos to design- who has time to deal with the money stuff?
While the financial part of running a business may seem like it should take a back seat, there are actually a few things that are pretty darn important to do now, before your business takes off.
Yes, it may be daunting because- um, you have to do EVERYTHING else, but taking care of these key things now will build a strong and healthy financial foundation into your business for years to come. Ultimately, they will save you time and money down the road and you’ll be glad you spent a little bit of extra energy.
Here are the three things every new business owner should do for their finances, like ASAP:
Open separate banks accounts for your new business
Even the tiniest of businesses should start out with a separate checking and savings account for their biz. Yes even if you only make $200 a month and yes, even if you think I’m being totally ridiculous right now.
Why? First it’s just good business practice, and in fact, it’s expected by the IRS. You def want to start out your new business by following standard business practices so, if you ever do have an issue, you can trace your good behavior all the way back to the beginning.
Second, it’s going to save you time later. Right now you probably don’t have that many recurring charges to deal with, but as your business grows that will change.
You know what’s a pain in the ass? Switching all your bank accounts over later and having to change all the cards in your accounts. What inevitably will happen is that you’ll forget to do one and end up missing valuable deductions.
You can save yourself all this time now just by starting off with a separate business account!
Finally, having your accounts separated will you keep your income and expenses organized and save you TONS of time in your bookkeeping. One of the things that take the longest when you’re doing bookkeeping with mixed accounts is figuring out which expenses are business and which are personal. Especially if you are someone who puts off your bookkeeping, going back through calendars and receipts can be a giant time suck!
When you have your accounts separated you don’t have to wonder about if something is for business, you know it is. All you have to do is categorize it and BAM! You’re done.
Choose a bookkeeping program and learn how to use it
New business owners often have the attitude that “I don’t need that yet so I’m not going to worry about it”. While that may be true for LOTS of things in your business- it’s not the case when it comes to bookkeeping programs.
Getting your information into a bookkeeping program early has a lot of benefits. One is that you’ll have all your information in one place for years to come. That means later when you want to look back at your business growth, you’ll have easy access to that data. Starting now means you won’t have to backtrack or Frankenstein data together from multiple places.
Another benefit to starting with a bookkeeping program now is that you have more time to learn it. If you’ve just launched your business, you probably aren’t fully booked yet and your finances are more straight forward. This is the perfect time to get to know your bookkeeping program and understand the basics of business accounting.
As your business grows, your bookkeeping skill set will grow WITH your biz, instead of trying to learn everything later when business is booming, you don’t have any time, and things are way more complicated.
How do you pick a bookkeeping program when you’re just starting out? Imagine how you see your business growing in 1 year- what products or services will you sell? Will you invoice clients or accept payments at the time of service or sale? What forms of payments will you accept? Will you hire employees and subcontractors or is it just you?
Answering these questions will help you find a bookkeeping program that will grow with your business so you don’t wind up switching later because you need more features.
Make a schedule for reviewing your finances and stick to it!
Another mistake new business owners make is thinking they are too small to spend time reviewing their numbers. Since their income and expenses are pretty small, they assume the financial stuff will work itself out.
Regardless of what stage you are in your business, reviewing your finances on a regular basis is key to creating a strong financial foundation. The ideal schedule is to do your bookkeeping once a week (which shouldn’t take you more than 30 mins) and then review your overall financial health once a month.
This keeps you engaged with the small details regularly enough so that things don’t slip through the cracks, and also gives you time to look at your big picture. Even if your big picture is only netting $200 month, you’ll immediately pick up on when you start to net $500 month and understand what you did to make that happen. You stay on top of the trends in your business and identify what’s working so you can repeat it!
The trick to sticking to this schedule is to make it a recurring appointment in your calendar so it becomes part of your business workflow. Don’t leave it up to chance that you’ll find the time to do- set the time aside now so you’ll always be engaged with your money.
Want to learn more about business finances- get the basics in my 6-day free email course. Enroll here!