The Complete Guide to Working for Yourself by Beth Williams & Dr. Jean Murray

Author:Beth Williams & Dr. Jean Murray
Language: eng
Format: epub
Publisher: Atlantic Publishing
Published: 2014-02-10T00:00:00+00:00

Be sure to answer each of these questions honestly and directly. Waiting to answer them until later is a recipe for disaster. By answering them now, you will better be able to determine if you can afford to hire employees, or if the office you are considering is within your budget, for example.

If you determine that you cannot yet afford everything you need or want for your business, be prepared to cut back. Instead of purchasing brand-new office furniture, for example, buy used. We discuss in depth the many ways you can save money later in the chapter.

The Small Business Administration advises that an operating budget should take into account such expenses as rent, depreciation, insurance, personnel, advertising and promotions, loan payments, accounting, legal, payroll, supplies, utilities, salaries, dues, fees, subscriptions, repairs, maintenance, and taxes (including local, state, and federal). Of course, some of these expenses – such as personnel and salaries – may not apply to you now, but perhaps they will in the future.

According to the Better Business Bureau, it is best to keep your budget simple. The organization recommends you only use two pieces of paper: one for your expenses and one for your income. On those two pieces of paper, write all your estimated (variable and fixed) expenses and income for the upcoming 12 months.

Beware of the critical mistakes business owners often make when creating a budget. First, be realistic. Of course, you want to be optimistic about success in your first year of business, but remember to be level-headed about your expected expenses and projected income.

Additionally, you must keep careful track of all the money that is coming into and going out of your business. (We will discuss accounting and bookkeeping methods in more detail in Chapter 10.)

Tips for Opening a Business Bank Account

Regardless of whether your business entity is a sole proprietorship or a corporation, you will need a separate business bank account for your business. Having a business bank account will benefit you and your business in several ways.

First, a business bank account is a sign of professionalism, signaling to others that you are serious about running your business in a professional manner. In the case of an IRS audit, the fact that you have a business bank account shows that you do not consider this business just a hobby.

Second, your business bank account will help you keep track of all the money that comes into and goes out of the business. Finally, a business bank account is an excellent way to verify each of your expenses and how much you paid for them every month.

Fortunately, opening a business bank account is straightforward and fairly simple. Start by researching the banks that offer business bank accounts in your area. When researching small-business bank account options, ask the following questions:

Is online banking for small businesses available?

Does the bank offer telephone banking?

Can you log onto the Internet to access important information, such as your account balance, paid expenses, and whether checks have cleared? (Some banks allow customers to view canceled checks online.

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