I was honored to be asked to present to a group of aspiring business owners last weekend. I completed the entrepreneurial course earlier this year and the instructor recently asked if I could speak to the students about “The Importance of Good Financial Recordkeeping.”
The key lessons that I shared that resonated the most with this group were:
- Separate your personal and business expenses from Day 1.
- Many of my small business clients come to me not knowing what their monthly income or operating expenses are. Everything was co-mingled in a personal account.
- Open a business checking account immediately. Otherwise, you will end up having to go through line-by-line on your account statements and highlight which transactions are business expenses.
- Use this business checking account only for business expenses.
2. Open a business savings account.
- Put a % of every commission and sales received in this account.
- Don’t get caught at quarterly tax time and not be able to pay your tax bill because you didn’t save a % of your commissions and sales for taxes.
- Check with your CPA to calculate your tax rate.
3. Shop around for banks
- Local banks tend to be more “friendly” to small business owners, especially start-ups.
- Local banks have little to no monthly maintenance fees, and lower monthly balance requirements, if any.
- If you travel frequently and across multiple states for your business, you may want the convenience of a bigger bank with a nationwide presence.
- Compare # of transactions allowed, monthly maintenance fees, and balance requirements to make an informed decision.