So many Americans dream of starting their own business. Being your own boss, pursuing your passion and the freedom and independence that it brings is priceless. We’ve all had that moment where we’ve considered how we can make money doing what we love… and then reality sets in. You can’t just be passionate about your business idea and make it work. You need to understand a lot of finance-related topics to get new customers, make a profit, keep your business cash-flow positive, and ensure you’re paying Uncle Sam the right amount at the end of the year.
Financial questions will often arise such as: How much can you actually charge for your products or services? What’s the legal process that you need to complete to create a company? Do you have the knowledge that it takes to run the bookkeeping side of it? Can you get your first customer… and then more after that?
You may feel overwhelmed thinking about the steps needed to make your dream a reality, but it’s not as complicated as you may think. In this two-part series, we’ll share six practical financial steps to guide you in the first month of your journey as an entrepreneur. By doing these six must-dos within the first month of your business, you’ll be set up financially as a business owner.
Let’s get started with the first three financial steps you should take when launching your business…
1) Research the Competition’s Prices
Let’s say that you are a graphic designer with an online business, and you want to understand how and what to charge your clients. One of the biggest obstacles that you might face is being underpaid for your services since it’s difficult to know the going-market-rate or what your competition is charging.
One way to ensure that you are getting paid fairly is to contact people in your similar field and ask for a quote or research their prices on their website. Or, you can do pricing research on online freelance marketplaces such as Upwork or CloudPeeps to see how individuals similar to your skill level, years of expertise, length of project and client requirements are setting their price points.
2) Open a Business Checking Account
There are several reasons to have separate personal and business accounts including protecting your personal assets, creating an audit trail, maintaining an image of professionalism and to deduct business expenses during tax time. Call your bank; they’ll love to help you set up your account. NerdWallet offers a great resource for finding a business checking account in your state. (FYI — you’ll need a business EIN in order to open a business checking account, so make sure you stay tuned for our second post in this series).
3) Choose Your Invoicing/Receivables Software
Not great at bookkeeping? You don’t need to be with today’s amazing software options. FreshBooks, Bench, Xero and QuickBooks all have great online tools to help you organize your finances such as invoices, account receivables, bill tracking, and more. Take your time to research the exact price and features for each software because they can be vastly different. For instance, some offer PayPal Business Payments (FreshBooks) and others don’t. If your business needs to accept online PayPal payments, this is an important feature.
If you get these first three things checked off quickly in the first month of launching your business, this will lay a positive financial foundation for future success. But, don’t stop there. We have three more things you must do in your first month (or two), which we’ll share with you in part two… Stay tuned!
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