If you’ve made the decision to start a business, congratulations! That’s a big step! However, there are some financial tasks you need to complete before you can officially begin. After you’ve established your business with the state (contact an attorney to make sure you get setup the best way for your business), there are some financial steps you’ll need to take.

1. Open a Business Bank Account

Keep personal and business finances separate by opening a business bank account. This makes tracking income and expenses easier and is essential for accurate tax filing. This will also be required for certain types of legal structures to ensure you’re separating your business entity from your personal.

2. Register for Taxes

After starting your business, you’ll need to register for state and federal taxes. Apply for an EIN (Employer Identification Number) with the IRS, which is used to file and pay various federal taxes, including payroll taxes, income taxes, and other franchise and compliance taxes. Each state also has tax registration requirements. Some include withholding tax, unemployment tax, sales tax, personal property taxes, etc. Some cities even have local taxes you’ll need to register for. Make sure you understand all tax requirements for your type of business in your location.

3. Create a Budget

A budget helps track how much money you expect to make and spend. It sets a clear financial plan for your business. Project your revenue based on the services or products you’ll sell and include key expenses like rent, supplies, and marketing.

4. Choose an Accounting System

An accounting system helps you record financial transactions like income, expenses, and profits. Choose a software, like QuickBooks, and make sure you set it up appropriately for your business.

5. Contract with Financial Professionals

In addition to consulting with an attorney for the proper setup of your business, make sure you hire a good CPA (Certified Public Accountant) to help you understand your compliance and reporting requirements, consult with you on tax planning, and complete your tax filings. You may also consider hiring a bookkeeper or other accounting professional or company to help you with the daily management of your financial and accounting tasks. 

 

Managing the finances in your new business is critical for your future sustainability. Take the time up front to get it done right!

 

Written by: Shauna Huntington & Haylie Ridenhour