7 Tasks to Tackle Before Starting Your Business
Maybe you have a great idea for a business and you feel ready to take the plunge. That’s awesome, but before you do, listen to the advice of those who’ve gone before you and consider completing the seven financial tasks listed below first. They will help ensure you’re in a good place financially before you get started.
And if you’re already in the midst of running your business? No worries! It’s never too late to follow these tips. So, without further ado, let’s discuss what an aspiring business owner should do as they prepare to launch their new venture.
1. Open a Personal Checking Account
Chances are good that you already have one of these! If not, contact a bank you trust and open up a personal checking account today. Doing so will give you a place to keep your personal funds so you can use your future salary to pay bills.
2. Create a Personal Savings Account
At the same time, open a personal savings account as well. You’re going to need a place to keep your savings as you build them up in preparation for taking the leap. And even after your business has launched, you’ll hopefully use the Profit First methodology to save a certain percentage every month – this will be the perfect spot to put those funds.
3. Build up Your Savings
It’s critical to have some savings in place when you open the doors of your business for the first time. After all, you’re likely to be the first investor in your business – hence, you’ll need money to invest in it. So don’t rush and jump into things unprepared. Instead, figure out how much money your company will need to start and then begin saving up that amount. Once you’ve achieved that goal, it’ll be a much better time to start your business.
Don’t forget that you’ll also need savings to support yourself personally. Things are typically a bit financially rocky in the early stages of a new business venture.
4. Calculate Your Personal Overhead
Here’s the big question: how much does it cost to take care of yourself over the course of a year? Put another way, how much money do you spend annually to live? We’re talking about all your costs, including your rent/mortgage, utilities, phone, clothing, food, toiletries, travel, insurance, heathcare, personal spending, and so on – include absolutely everything here. This is your personal overhead, and it’s necessary to calculate this grand total because it will likely be your starting salary (the amount you will target in terms of business revenue). Essentially, you’ll want to exceed this amount so your business becomes sustainable for your life.
5. Review Your Personal Tax Accounts
If you’ve ever worked, then you have a history with the IRS and, hence, have a tax account online that you can gain access to and view. While this might initially sound worrisome, in actuality, setting up a login for these accounts (if your state imposes personal income taxes, you can set up this account too via your state department of revenue or taxation website) is good because then you can easily see any taxes you owe and make payments. Remember, knowledge is power. Knowing what your company’s tax liabilities are and how to make your estimated tax payments makes this aspect of things much less scary.
6. Check Your Personal Credit
Another step you should take before starting your new company is to check your personal credit history. Being proactive in this area is a good idea so you can secure the lowest interest rate possible if/when your company needs to apply for some type of capital in the future – whether it be a line of credit or loan. Identify any errors on your credit report now so you can fix them and keep paying your bills on time so you can continually improve your credit score.
7. Look at Your SSA Account
Finally, it’s smart to gain access to your SSA (Social Security Administration) account in advance of launching your business. Why? Because all of the money you’ve earned throughout the years (both through regular employment and self-employment) is reported to the SSA. Logging into your account will allow you to see your lifetime salary history – pretty interesting! Like your credit history, it’s wise to keep tabs on this information to ensure it’s being reported accurately.
So as you prepare to start your business (or continue running it), take some time to check off the seven tasks listed above – it shouldn’t take too terribly long, and, trust us, you won’t regret it! Each of these items will help prepare you to achieve success with your new venture – which is what we all want. After all, strengthening your financial know-how can only lead to good things. Wishing you lots of luck on the journey!
