Starting Your Business: Taxes, Banking, and Bookkeeping
If you’re starting out as a social media manager, content creator, or pretty much anything that goes into being a virtual assistant… you’ve come to the right place!
My name is Michelle, but people call me Chelle. I own a Digital Marketing business and run social media accounts for a living. I will be sharing business/entrepreneur tips, social media changes/updates, and things I learn along my journey of being a business owner. I desire for YOU to be successful and do what you love doing, so I’m just here to share anything that helps get you to where you want to be!
Let’s dive right into the fundamentals of owning a business!
There are many programs out there that you can use for finances, organization, management, etc… I’m simply here to share with you what I have personally found helpful and what has led me to where I am today. Please do your research for what works best for YOU, but sometimes it just helps to narrow down all the Google answers and hear from a real person :)
In this specific blog, I will be covering:
How to become an “official” business & tax information
Getting a business bank account
Bookkeeping/invoicing
How to become an “official” business
When I first started charging people for my services, I realized I was going to need to file taxes. I wanted to separate my business from myself, so I filed as a single-member LLC (although you can also file as a sole proprietorship or S-Corp), it just depends on how much you plan to make or if you’re looking to scale in the first year.
The very first step I took was filing my LLC. Again, look into the different types of business structures to see what’s best for you. If you file as an LLC shouldn’t really change Step 2. Once I filed for my LLC, I got an EIN. This took less than 10 minutes.
Ok, so I have my business & EIN…
now what?
Now I would go open up a business bank account. You can do this pretty much ANYWHERE you want to. I personally wanted to go with a bank that was separate from my personal bank account. Some people stick with their same bank, so it’s totally your preference! The reason I wanted a different bank completely is because I wanted to KNOW that when I saw anything from Capital One, it had to be business-related. I did not currently bank with them, they offer a high APR on the savings account, and I wanted the business credit card too.
I made an appointment at a Capital One branch near me. Not sure if you need an appointment, but I went during COVID so I had to have one.
Here’s what I brought to open up my business bank account…
I had my EIN letter with the number on it, my license, and a check for $1,500 written out to my business (so I had something to deposit). Not every bank requires this, so be sure to check online to see what they ask you for when opening up a business account.
I got the Spark Business Basic Checking, Business Advantage Savings, and Spark Miles Select Business Credit Card.
Honestly, I chose the credit card that would get me the most bonus points AND the savings account that would get me the most APR. However, find what’s most important to you! :)
After I got my account information, I set up my Wave Apps & Quickbooks Accounts
Honestly, I only used Wave Apps at first because it was free. No matter what you use, unless it’s Zelle, they will take a percentage of the income. I recently switched over to Quickbooks for newer clients because I do ALL of my reconciliation & bookkeeping in there anyway. However, Wave Apps is still amazing for just starting out! It’s very convenient to be able to have recurring invoices for clients (if you charge a set price). Just make sure you’re logging EVERYTHING into the website… expenses, income, mileage, etc.
The reason I use Quickbooks is because I can still categorize all my transactions, take photos of receipts, log all my miles, invite my accountant and CPA to see everything, and it’s just super user-friendly. I use Quickbooks Online.
What else do I need to know?
KEEP YOUR RECEIPTS!
I cannot say this enough. Keep receipts - even take a photo of them! Make sure that any “meals” you plan to write off has a receipt that also says WHO you met with and for how long.
TRACK YOUR MILES
I wish I would’ve been better at this because I would’ve paid fewer taxes, but that’s ok! I would track your miles - ALL miles - and then separate the mileage of personal from the business miles. It helps with the IRS reviewing everything at the end of the year! I will do another blog about what I have found is a write-off vs is not a write-off.
SET MONEY ASIDE FOR TAXES OR PAY QUARTERLY TAXES
Again, this is completely up to you. I personally put 30% of my income into a savings account for taxes. There is a small fee at the end of the year for not paying them quarterly, but the amount of money that I accumulate in the savings account makes it worth it. Another reason I strongly suggest a high-yield savings account. Even just personal ones for travel, emergency savings, etc.
HAVE A MONEY MINDSET
From day 1, I already had clients that were wanting to pay me because I had been working for them for free for a couple of months before that. I was expecting money, so I got money. I know it’s a lot easier to have that mindset when it’s right in front of you, but I want to encourage you ALL to have that mindset too! If you’re reading this then you are being paid, it’s just not monetary yet. You’re investing in yourself, so expect a return on that investment. Know that your time + investment into this is going to make you money and you will be able to help others with whatever services they need and you offer.
So what’s next?
I am going to dive deep into all things finances/bookkeeping soon, but I am going to go over a few more foundational elements people need in my upcoming blogs. This includes:
Branding/logo/business cards
Website/SEO
Apps that I couldn’t live (or do business) without
Time management
What to charge
Contracts
Onboarding
