Episode 75: 7 Steps to Set Your Business Up Right
Transcript Episode 75
Welcome to the 100 degrees of entrepreneurship podcast. The show for purpose driven entrepreneurs who wanna get inspired to step outside of your comfort zone, expand into your purpose and grow your business in a big way. I’m your host, Stephanie Skryzowski, a globetrotting CFO whose mission is to empower leaders to better understand their numbers, to grow their impact and their income.
Let’s dive in.
Hey, everybody. Welcome back to 100 degrees of entrepreneurship. I’m Stephanie, and I’m here to talk to you today about the seven things that you need to do to get your business set up right from day one. So seven things, all easy stuff that you can do starting today to make sure that your business is set up right from the start.
If you are in the early stages of your business, or honestly, even if you’re not, now is the time to make sure that you can check all of these things off your list. So I’m gonna go through the list. I want you to be mentally checking the things off in your head and if you have not done one of these things, I want you to pause this episode, go make a note, go put it on your calendar to do the thing and come back to me, okay.
So before we get into it, I just wanna tell you a funny story. I’m podcasting from my closet today because my husband is doing work in the kitchen, and so my office is really loud and my girls are both taking a nap. And I basically disappeared up here with my podcast equipment.
My husband didn’t see me come up here and he needed to go to the store, but wanted to tell me first, since my girls are here, and he didn’t know where I went. So he was like freaking out, running all over the house. Finally, my closet door, flies open.
He took a deep breath. Oh my God. I didn’t know where you were. I was starting to get really worried. And I’m like, I’m wondering where the heck did he think I went? Just took off walking down the street and never to return? Anyway, funny, funny. Here I am in my closet.
Okay, so the seven things that you need to do from day one in your business to make sure that you are set up for success. Are you ready? Let’s do it. Okay, number one, I want you to register your business with the IRS or whatever your tax entity is if you’re outside of the us and the state.
Register your business. Tell the authorities that your business is a business and get things on the up and up from day one. You don’t wanna have to go back and do this backwards in time. And this also is related to number two on my list. Open a separate business bank account.
And they’re related because often you can’t open a separate business bank account, unless you have an EIN, that’s employer identification number with IRS. Your bank is probably not gonna let you open a business bank account unless you are a registered business entity.
So register yourself with your tax entity, the IRS, and here in the US and your state and open a separate business bank account. And so number two, open a separate business bank account. I want you to open both a checking account and a savings account.
One of each, checking account and a savings account. And this is because you’re gonna want to set money aside on a regular basis, both for taxes and for just your general profit and savings in your business. So you wanna have both of these bank accounts separate.
Okay, so that’s one and two. Let’s keep going. Number three, I want you to pick a tool in which you are going to track your numbers. So my preferred tool of choice y’all know is QuickBooks online. That is my favorite accounting system for so many reasons. That is where my books are, where all of our clients books are, and where I always recommend.
So I love QuickBooks online. There are other tools that you can use as well. Wave accounting is one that I believe is free. Excel is an option though, not my favorite option, because like I always say, set yourself up today for the business that you wanna be a year from now.
And a year from now, you wanna have so much exponential growth that you will have long outgrown Excel as your accounting system, right? So let’s pick a tool. And as part of this, we’re still talking number three, here, set up your tool. And that for QuickBooks, that means connect your bank accounts and start recording your revenue and your expenses in real time. So we need to have a process by which we are tracking our numbers in real time. So that is number three.
Number four, I want you to create a monthly routine. So your monthly routine can be like an hour every single month to check your bank balance, to review your revenue and your expenses and QuickBooks or whatever accounting system you choose.
And really get to know your money, understand the way it flows in and out of your business, understand what you’re spending money on and use that time to really help you make strategic decisions. Hey, what’s working in my business when it comes to revenue? What’s not working when it comes to revenue?
What is costing me more than it’s actually making me, right? Where am I spending money or maybe I don’t need to. So create this monthly routine where you are spending time with your money every single month. So that’s number four. Number five is hire help.
So for you, this might mean a CPA, an accountant to help you do your taxes. That’s always my recommendation for the first person to hire in your business in terms of your finance team, is an accountant. Maybe hiring help means you already have an accountant.
So you’re hiring a bookkeeper, somebody to do your bookkeeping every single month. So that’s one thing you can take off your plate. And then you’re just responsible for reviewing the reports that come out of QuickBooks instead of doing all entering. So whatever that is, hire help.
The other person I would strongly recommend you hire is an attorney. And now I’m not saying like, get a very expensive attorney on retainer, like, you know, in perpetuity, like forever. But understanding, and maybe putting a little bit of money and time aside to make sure that you have the right contracts and other protections set up in your business.
And I speak from the deepest depths of tragic experience because I did not have good contracts set up from the beginning of my business. I lost out on a lot of money and had some really ugly situations in my business, cause my contracts were garbage.
So hiring help from the beginning means not only a tax accountant, maybe a bookkeeper, but also getting the right support that you need from an attorney.
Hey friends, are you feeling stuck with what to do next to manage the money in your business? Maybe you’ve logged in to QuickBooks once or twice, but got instantly overwhelmed, maybe you started to set revenue goals, but don’t know where to go from here. Maybe you simply know that managing your numbers is the right thing to do, but you don’t know what that actually means.
I’ve got you covered. I have a brand new 10 step checklist to manage your business like a CFO without making it your full-time job. Head over to 100degreesconsulting.com/checklist to get the free checklist.
Okay, so number six, pay your quarterly taxes. So if you are in the US and you’re a registered business, you will need to pay quarterly taxes. The IRS wants you to do this cuz they want their money. And it’s just a good habit to get into. Every month, you’re gonna be setting aside money from your business checking account to your business savings account for taxes.
And then every quarter you’re going to be paying an amount to the IRS. Now, the IRS does not send you a bill. They don’t magically know how much money you’re making and then send you a bill for their cut of it, right? This is all on your own.
This is you being proactive and paying taxes on your own. Now, what happens if you dont? Nothing, not really, right. The IRS is not gonna track you down and say, Hey, I secretly know that you made money this quarter. Where’s my cut of it? They’re not gonna tell you that.
But what is gonna happen is that when you go to file your taxes in April, the following year, they will know that you did not pay your quarterly taxes and they may assess you a penalty, a small fee. Based on how much you didn’t pay throughout the year, basically. So they’re gonna assess you a small fee if you did not pay your quarterly taxes.
Now we can go into a whole discussion here. I know some business owners that choose intentionally not to pay their quarterly taxes because they wanna hold onto their cash and they would gladly do that. And then just pay the small fee at the end of the year.
I don’t do that. I do pay my quarterly taxes. I’d rather just have the money out the door. And then I don’t really have to think about it. Your tax accountant should help you determine how much of your, how much your quarterly tax payments should be. They’ll usually look at like last year’s tax return and potentially your projections for this year.
And tell you about how much money you should pay on a quarterly basis. So pay your quarterly taxes, just get into the habit of doing that. The next thing that I want you to do is to automate your savings. So on the personal side of things, we’re not really talking about personal stuff, but I just love sharing this tool.
I use digit for my personal savings. It’s basically an app that connects to your checking account and it starts to get to know your spending habits and it moves money over from your checking account to the savings account at their own bank. This online bank based on how much money you have in your checking account.
So some days maybe they’ll move like $5 over because they know, okay, well you can afford it. You’re not gonna notice this $5 missing or some days if you’ve got a higher balance and their AI or whatever has determined that you don’t have any big expenses coming up, they’ll move like a hundred dollars over.
So it’s really fun. This is a way that I have built my own personal savings account to a number that I really never thought possible. I never considered myself a good saver. So it’s built my savings to a level I never really even dreamed. And all doing it like totally automated in a way that I really kind of never noticed the money was gone.
So I love it. I suppose you could set it up for your business too, I think. But what I really recommend for your business is that you do it more strategically and so every month you move a percentage of your revenue over into your savings account for both savings, your profit basically, and taxes.
So maybe 15% for taxes, 15% of your revenue and 10% for profit. Maybe you’re moving 25% over at the end of every month of your revenue over into your savings account. So if you can automate this and maybe it’s not 25% every month, maybe you’re in the early stages of your business.
And you’re like, okay, I’m not sure what I can afford, but that seems like a lot. Let’s start with a hundred. Automate just a hundred dollars moving over every month from your business checking account into your savings account and then that number can grow.
But I think the key here is the automate part, right? If you don’t automate it, it’s a lot less likely it’s gonna happen. Take that from me. I’m a money person. I think about money. I work with money all day long, but honestly I don’t consider myself the best saver.
And the thing that has saved me, pun intended. The thing that has saved me is automating. So if you can just set up an automatic transfer every month for whatever that amount is from checking to your savings, that is gonna set you up right from the start.
Okay, so let’s go back and recap, cuz I may have lost count of the numbers here. So number one, I want you to register with IRS or the state. Number two. I want you to open up a business bank account, both checking and savings.
Number three, I want you to pick a tool to track your numbers like QuickBooks online and get it all set up and start using it. That’s the key here, my friends. Gotta use it. So that was number three. Number four is to create your monthly routine where you’re spending about an hour every single month.
Looking at your numbers, your bank balance, and your revenue, your expenses, your P and L, profit and loss statement. That was number four. Number five was hire help. So whether that’s a tax accountant or a bookkeeper, or just an attorney to make sure that your contracts are set up from the start.
I know that doesn’t seem like a finance thing, but they’re real connected when a good contract would’ve saved you tens of thousands of dollars. And so that was number five. Number six is to pay your quarterly taxes. And number seven is to automate your savings.
So if you do all of these seven things, if you have all of these seven things done from the start, you are gonna be set up for a really, really strong beginning to your business. And if you are farther along your journey and you don’t have some of these things set up now, just take a pause.
Take a minute to set aside maybe 30 minutes this week to do whatever was missing out of this list. So maybe you’ve gone so far as to open the business checking account, but you don’t have the savings account. Boom, go get it set up, that should take like 15 minutes and you could probably do it online too.
Or maybe you have QuickBooks and yet kind of got it set up, but you haven’t really been looking at it in a while. Okay, cool, let’s get caught up with that this week. Maybe you’ve been DIYing your taxes. I’m like quietly raising my hand over here in the corner, cause I DIYed my taxes for like the first two or three years of my business.
And then I got hit with a five figure tax bill and decided, okay, maybe I’m not the best one to do those anymore. I’ve learned a lot since then, I will say. So maybe it’s, you gotta hire somebody. Maybe you have to start paying those quarterly taxes, or maybe it’s just, you’ve never really automated your money management and you can automate that simple thing.
Just automate your savings for big, big, big results. So I would love to hear what of these seven steps do you need to do in your business? And what action are you gonna take first? You know where to find me. Screenshot this podcast episode, wherever you’re listening, tag me on Instagram, @stephanie.skry.
And tell me which of these seven tips are you gonna use. What are you gonna do first? I guarantee big, big results in both your business and your mindset, because you know what, when you act legit, when you get your business more legit, you act more legit.
You feel more legit as a business owner. And I know that can only be awesome and powerful for you all. So thanks everybody for listening and I’ll catch you next time.
Thanks for listening to the 100 degrees of entrepreneurship podcast. To access our show notes and bonus content, visit 100degreesconsulting.com/podcast. Make sure to snap a screenshot on your phone of this episode and tag me on Instagram, @stephanie.skry and I’ll be sure to share. Thanks for being here, friends, and I’ll see you next time.