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Jul 28, 2020

What You Should Do With Your Finances Day 1 of Your Business

You have decided to start a business, congratulations! This is a big courageous step that merits recognition. There are a million things to do during the beginning stages of your business. Narrowing down the most important items can help make sure you are off to a good and efficient start.

There are a few things you will want to focus on to create a strong foundation, but no need to get into the small details just yet! So what should you do with your finances on day 1 of your business?

 

Create A Business Bank Account

Creating a business bank account is certainly one of the first, if not the first, thing you should do when starting a business. Many business owners make the mistake of combining their personal and business transactions, especially in the early days. But this makes it very difficult to know whether your business is profitable in debt. Keep your bank accounts separate to understand your expenses, cash flow, and overall financial health better.

Not only does this help you understand the stability of your business better but for some business structures, it is actually illegal to combine your business and personal expenses.

 

Develop A Basic Bookkeeping System

On day 1 of your business, you may or may not have your first client, a loan, or even an office building. So you likely do not have complicated books that need a lot of attention or upkeep. However, you will certainly have startup expenses.

One option to record your transactions is a traditional bookkeeping software like Quickbooks or Xero. Another option is to simply track your transactions in an excel document. 

Excel can be a temporary solution until you generate some revenue or are able to purchase bookkeeping software. If you do choose to use excel, be sure to track the transaction date, vendor, description, amount, and bank account this transaction is processing through. 

 

Research Business Structures

This is possibly one of the most important parts of establishing a business. This will determine how you, as the owners, get paid, how and when you pay taxes, and even how your accounting needs to be set up. One good resource for determining your structure is the IRS website where they explain tax implications, reporting requirements, and how to form any of the given structures.

 

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The Basics of Debits & Credits

 

Enter Important Tax Deadlines in Your Calendar

You may or may not have decided on a tax structure. If you have, begin to put important tax deadlines in your calendar. Of course, you don’t want to learn taxes are due on the day they are due so it may be a good idea to set the notification a month or two in advance. 

Eventually, you should consider working with an accountant or CPA to help ensure you are accountable for the necessary tax deadlines.

 

Starting a business is no easy task, so getting a tip or two to put you on the right track can make all the difference - and of all the areas to get help in, your finances are an excellent bet. Consider these important tips in the early days of your business to help set you up for success.

 

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How To Identify A Process is No Longer Working

 

 

Disclaimer:

This publication is designed to provide information on federal tax and accounting laws and/or regulations. It is presented with the understanding that the author is not rendering legal or accounting services.

This text is not intended to address every situation that arises or provide specific, strategic tax and/or accounting planning advice. This text should not be used solely to answer tax and/or accounting questions and you should consult additional sources of information, as needed, to determine the solution to tax and/or accounting questions.

This text has been prepared with due diligence. However, the possibility of mechanical or human error does exist and the author accepts no responsibility or liability regarding this material and its use. This text is not intended or written by the practitioner to be used and cannot be used by a taxpayer or tax return preparer, for the purpose of avoiding penalties that may be imposed.

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