Keep Your Personal Finances Separate From Your Small Business
Setting up a business account makes sense. It disentangles your regular spending from your business expenditure, so it's easier for you to track where the money you're earning via your business is being spent. It also makes financial reporting (and tax time) much easier!
Exactly what documents you need to set up your business bank account will vary depending on the structure and ownership of your business. Though, you'll typically need your trade name registration and registration documents relevant to your business structure (ie. partnership registration or agreement for partners, articles of incorporation for companies, and business registration for sole proprietors).
Be Prepared for Your Taxes
As the saying goes: the only certainties in life are death and taxes. If you don't want your tax bill to be a shock, then you need to prepare for it year round.
Here's what that looks like:
- keep your books up-to-date at all times
- retain receipts from business purchases & store them in a safe space (or digitally)
- store copies of your invoices and customer purchase receipts
- learn about the business deductions available and take advantage of them, where possible
- file your tax return on time (even if you can't afford your tax bill)
- read this small business tax return checklist.
Budget for Tax Time Too
Being prepared for your taxes means budgeting for them too.
We always suggest that you put aside a little bit of money each time you're paid. Put it into a separate account so you won't be tempted to dig into it.
For budget-conscious small business owners, many online banks offer free accounts. These will help minimize the fees you pay on your business banking throughout the year.
We'd suggest at least 15-20% of your earnings go into this account. Though the exact amount will vary depending on your personal circumstances.