Importance of Good Financial Recordkeeping

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:

  1. 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.
Stressed about personal vs. small business finances

Stressed about personal vs. small business finances

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.
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