The 7 Must-Do Money Matters for Mompreneurs

The Penny Hoarder

 

 

This post was featured by The Penny Hoarder Blog on 8/24/2015

 

 

Are you a wiz when it comes to money matters and your business? Or do you consider Outright (we now use Quickbooks for Small Business) and other administrative tasks a necessary evil on the road to getting paid?
 
 
When you work for yourself, how you handle the financials can make or break your business. Here are seven tips to help you get on top of your company’s finances.
 
 

The Seven Must-Do Money Matters for Momprepreneurs

 
 

1. Open a business checking account

It’s important to keep your business finances separate from your personal accounts. If you formed a corporation or LLC, you’re legally required to keep everything separate. But even if you’re a sole proprietor, it’s good practice.
 

Once you have obtained your Tax ID number for the business, you should open a business checking account. You’ll appear more professional when you write checks from your business versus your personal account, and you will be able to accept payments in your business name. In addition, having a separate business account will streamline your bookkeeping, making it easier to understand your business’ cash flow on a monthly basis. And, come tax time, all your business expenses and income are automatically organized.
 
 
 

2. Start withholding taxes with every check or payment

When you work in an office, the employer automatically withholds taxes and social security with every paycheck. This doesn’t happen when you’re self-employed, and many new business owners feel the pain at tax time, when they need to dig into their savings to pay their federal and state income taxes.
 

Savvy entrepreneurs make it a habit to withhold a percentage of each check or customer payment they receive. For example, you could open a dedicated savings or money account where you transfer 25% (or another percentage) for each check or payment received as your own personal tax withholdings.
 
 
 

3. Keep up with your quarterly tax payments

When you run your own business, tax time isn’t just once a year. You need to make estimated tax payments throughout the year. They are divided into four payment periods throughout the year: April 15, June 15, September 15, and January 15.
 

For self-employed individuals and disregarded entities (i.e. single-member LLCs, partnerships, and S Corp shareholders), the IRS recommends using Form 1040-ES to calculate your individual estimated tax payments.
 
 
 

4. Meet with a tax advisor/accountant

Maybe your business’s finances are simple enough that you don’t need professional help with bookkeeping.
 

That’s fine, but it’s still smart to meet with a tax advisor or accountant at least once to make sure you’re doing all you can to meet your legal obligations and minimize your tax payments. Maybe they’ll advise you to form a different business structure or suggest new tax deductions. This is actually a great time of year to schedule an appointment, since you avoid the tax-time rush, and still have a few months left in 2013 to act on their recommendations.
 
 
 

5. Take charge of your recordkeeping

When you run your own business, you need accurate, comprehensive records for all financial transactions (income and expenses).
 

When it comes to making things simple at tax time, TMM recommends Shoeboxed. It helps scan and organize your receipts, create expense reports, track mileage, and more. We also love Outright (we now use Quickbooks for Small Business). Get 50% off, on us Outright (we now use Quickbooks for Small Business).
 

If you haven’t been keeping track of your business expenses, get caught up now. If you find yourself struggling with this administrative task, look for a new solution, whether it’s outsourcing the task to someone else, investing in a technology solution (like a receipt scanner or new app), or dedicating 30 minutes each week to expense tracking. You’ll be grateful come tax time.
 
 
 

6. Keep up with your billing

For most businesses, if you don’t send out invoices or bills, you don’t get paid. Period.
 

One of the keys to a healthy cash flow is making sure that you invoice clients and customers on a timely basis. No matter how busy you get with project deadlines or other deliverables, you need to make invoicing/billing a priority.
 
 
 

7. Don’t forget your retirement

I know that for most solo business owners, money feels tight and you’re thinking more of your day-to-day expenses, rather than saving for the future.
 

However, you’re now solely responsible for your retirement. As a small business owner, you have a range of possible retirement plan choices, from SEP to SIMPLE IRA plans (you can discuss your options with a tax/financial advisor). While you may be hesitant to tie up money you might need for everyday expenses, the key is to get started on retirement savings, even if that means a small, regular investment of $25 per month.
 
 
 

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Nellie Akalp

CEO of Corpnet.com at Corpnet
Nellie Akalp is a serial entrepreneur and small business expert. She currently serves as the CEO ofCORPNET.COM, an online legal document filing service, where she helps entrepreneurs START A BUSINESS, INCORPORATE, FORM AN LLC, and offers free BUSINESS COMPLIANCE TOOLS.
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5 Comments

  1. Melissa Bolton

    Thanks to The Penny Hoarder for sharing this awesome article on their Facebook page today.

    Reply
  2. Jim

    I work with an accountant throughout the year and we always schedule our end of the year meetings around now. It’s slow once you get past the October 15th extension deadline and it’s not right up against the end of the year, so you still have time to do things if you need to.

    Reply
    • Heather Allard

      That’s a great idea, Jim! I’m thinking I should schedule an appointment with my tax accountant right about NOW. 🙂 Thanks for sharing!

      Reply
  3. kellymudry

    my favourite day of the month is sending out my invoices, so it’s never hard to make that a priority! However, I do not find it necessary to have a business checking account: banks seem to charge a lot more for a business account than they do for a personal account, so I simply have a separate checking account for all my business activity, that I use only for my business. I am a sole proprietorship, so I can do that. And yes, it is excellent advise to have another separate account, into which you pay monthly a portion of your quarterly income tax. That way, it does not come as a nasty surprise.

    Reply
    • Heather Allard

      That’s awesome, Kelly!! 🙂

      Reply

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