Now, you will get help from your accountant or attorney on this, but before you pay them big bucks, go to Google. I want you to Google LLC, partnership, sub-S corporation, or sole proprietor; I do not recommend the sole proprietor for most people just because there are some tax advantages the other way, but again talk to your accountant about that. You will determine this in advance because this will set up how you do everything else we discuss.
The one thing that I want you to do is to make sure that you set up a separate checking account for that entity. Think of that entity as its own person. It is not you unless you do the sole proprietor, but if you do anything else, it's its own body.
I want you to review financial software. Please don't go crazy with this because you may change it years down the road, but you need something. It can be Quicken. It can be QuickBooks. It can be online. It can be a desktop version. It doesn't matter, but you need something. Because all these hints will help you not have to backpedal later, so, review your software.
I want you to block out time in your calendar to review your financials every week when you are first starting or if you are struggling. It can be 15 minutes, or it can be an hour. Now, as you go down the path, this could probably bump to once a month. It's easy to get complacent about this if times are excellent, and when times aren't so good, or you are just starting, you find yourself staring at them. Stay religious to your calendaring of this because if you do, when times are good, and you are reviewing them, and you know exactly where you are, those bad times won't be so bad.
I want you to determine your expense and income categories. This is where the financial software we talked about will help you. Because in most of those, they give types of businesses; then, they give you some suggested categories. You can add to those or delete those as they pertain to you. Don't go crazy. It's really easy to want to have a category for absolutely everything. Office supplies and consumables can be one category. You don't have to have one for dry-erase markers and one for pens. Keep it simple. Your accountant will appreciate you. Simple is better.
And this is the hardest one because when you start out, you are not certain what you will make and spend, but you have some ideas. Be ready; this is a very fluid piece of paper. Set what you think you are going to make and what you think your expenses are. You will need to keep a close eye on them when you are first starting. Stick to it as best you and tweak where needed.
Congratulations on your new business or business idea!
Now, let's grow it.
To start, you must decide what type of entity you want to be, what financial software to use, calendar time to review financials weekly (at least until you are comfortable with this but no less than two months), what your basic expense and income categories are going to be, and lastly, you must set your budget.
It can be overwhelming, but you have your roadmap. There are many great resources to take the edge off this grand journey, and you don't have to do it alone. Your coach, Leigh, is always available for a first-time, FREE, one-on-one consultation. So, if you feel you have hit a roadblock, click here to sign up and receive an email to schedule your complimentary coaching session now!
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