You started a business! You got customers! You made money! Congrats! But don’t pat yourself on the back too much just yet. You have to figure out what to do with that first check paid to your new business.
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Sole Proprietorship or Something Else
The first thing you need to do when getting paid, ideally before you get paid, is decide what type of business you are operating.
If you are just operating the business as yourself and don’t have any worries about lawsuits, you can operate as a sole proprietor. That means you are the business, it is not a separate entity. When a customer gives you a check, it is written to you.
If you have any other business structure, such as an LLC, C Corp, or other entity, you need to register with both your state and the Federal government for an EIN, or employer ID number. Once you are registered, you can accept payments to your business.
Get Your Business Bank Accounts
But wait! You can’t just take those checks and put them in your personal bank account (you technically can as a sole proprietor, but I don’t recommend it. Keep reading to understand why). You need a new account just for your business.
Head down to the bank and setup a new account for your business. It is important to keep your business accounts separate from your personal accounts for taxes and tracking reasons.
I found that several local banks had free business checking accounts for small businesses with a limited number of transactions per month. I have all of my business accounts at the same bank for convenience, but have my personal accounts somewhere else.
Get Accounting Software
The longtime favorite for new business accounting is Quickbooks. Quickbooks Pro (look at sites like Amazon to find it at a discount) is a complete accounting system in one. It helps you track customers, vendors, employees, invoices, bank accounts, transactions, and any other financial activity your new business might have.
It also generates financial reports, employee tax forms, assists with budgeting, and takes care of pretty much any financial task a new business might need.
Check out our list of the best cloud accounting software programs – several of which are free!
Track Your Money
Make sure to set up your bank accounts for online banking and do monthly account reconciliations to ensure you are capturing all of your transactions.
Even though it seems like a hassle at first, entering your customers and vendors into your system for each tracking, history, invoicing, and payments is worth the setup time. As a business, you need to have records of your transactions for your customers and your own accounting needs.
Hire an accountant. Use them for your annual filings, taxes, and any accounting questions you have for your new business.
What Works For You?
If you already have a business, what works well for you? Have you used Quickbooks or another system for your accounting needs? Do you have an accountant or do it yourself? Please share in the comments.
About Carson Derrow
