Many individuals enjoy running their own businesses, and solopreneurship could be an exciting opportunity for you. Before you delve into self-employed proprietorship, however, make sure you properly prepare with these seven financial steps.
1: Save Up
Starting your own business will likely involve at least a little capital, and any new business comes with some risk. Get a little savings so that you don’t have to worry about paying bills while you’re getting established.
2. Get a Business Bank Account
A business bank account is free at many banks, and it helps you keep track of business income and expenses. Sometimes it’s needed to get a loan too (if you’re financing any of your new business). You may want a checking and a savings account.
3. Get a Business Credit Card
Business expenses can add up, and that affords an opportunity for credit card rewards. Consider signing up for a business-specific credit card, which could help you get cash back, airline miles or other rewards.
4. Separate Business and Personal Finances
Keep your business finances in the business account, and your personal finances in your personal account. Separating business and personal finances makes accurately tracking business finances easier, and clarifies things in the event of an audit. Pay yourself by transferring funds from the business to the personal when you’re able to.
5. Set Aside Funds for Taxes
One reason to have a business savings account is so that you can set aside money for taxes. You’ll be expected to pay quarterly self-employment tax bills. Transfer some funds to savings each month or with every paycheck so that you have money available for these bills.
6. Track Your Income and Expenses
Whether you use a spreadsheet or a program such as Quickbooks, track every expense and income that you have. This is the only way to accurately monitor profitability.
7. Consider an Accountant
Consider hiring an accountant, either on an ongoing basis or just to get you started. An accountant will explain what expenses qualify as tax deductions, and they can prepare your taxes. You’ll properly take care of tax matters, and have more time to focus on your solopreneurship.
Get Ready for Your Solopreneurship
Many people have successfully started solopreneurship, and you can too. Get ready with these steps, and you’ll have a strong financial foundation for success.