I hear about so many people that get into their businesses but just aren’t properly set up! When you’re just starting out, there’s no point in going the full monty because you need to make sure that whatever you do is making money.
Once you do start making money though, it’s time to get serious. Here are three things that most people either forget or just don’t do in their business.
1. Time To Get Legit!
That’s right! Being a freelancer is cool. Making some cash is nice. Now that you have some clients coming in, you need to protect yourself!
When I first started, I was doing business as a DBA. That means “Doing Business As”. This is an entirely legit way to do business. However, it offers no protection at all. It’s saying that you’re just a person doing business as an individual with a different name.
What you should do, or consider, is getting incorporated. The benefits heavily outweigh doing business as a DBA. You’re protected, so people can’t come after YOU, they can only go after your business. You can start building business credit, owning assets, writing off expenses, and so much more!
I’m not a professional, so I can’t tell you what exactly to register as, for that, you’ll probably need to speak with an accountant.
2. Get An Accountant!
Seriously. How much do you know about taxes, and what you can and can’t write off? Do you really want to be responsible for your books?
I’m not saying you can’t do your numbers, but it’s 1000 times easier to have someone do it for you. Not just someone, a legit certified accountant.
They know their craft just like you know yours. And this ain’t no secret; tax men don’t play around.
One time I worked a job where the owner thought it’d be wise to do everyone’s payroll taxes. Well, it wasn’t wise, and all the employees got screwed over because a simple mistake of paying the wrong amount on city taxes. It SUCKED! I ended up owing a lot of money at the end of the year because of it.
Even if you aren’t doing payroll, when I first started my numbers were everywhere! When I got my accountant involved, everything was suddenly organized, and I had an incredibly clear view of the figures for my business.
I currently use a service called Less Accounting to get a glance of all my numbers when I need, but for all my bookkeeping and taxes and tax planning, I use a local CPA. If you’re in the NY area, let me know, and I can recommend someone.
It doesn’t hurt to invest into something that’s going to leave you with fewer headaches in the long run.
3. Get A Separate Account
A lot of times, a business account is necessary for specific things like a business credit card, loans, proof of being in business, etc.
It’s also ideal for separating your personal expenses from your business ones as well as purchases.
When you go the legit route, you’ll also need a business account. One of the best benefits of this is to protect your personal assets!
You and your business are considered to be separate entities, so best keep that money separate too.
I hope this helps out when you start to get serious about your business and the money starts rolling in! If you have any questions, feel free to leave it in the comments!
*I’m US based, so if you’re not from the US, maybe some of this doesn’t apply.