When you first set up an LLC and start working as a business owner, it’s easy to get caught up in the day-to-day tasks of running your company. However, one important thing that you can’t forget is setting up your agency finances.
Your agency finances are important for two main reasons: they help you track your expenses and income, and they give you the information you need to make smart financial decisions for your business.
This guide will cover what you need to know about setting up your agency finances so you don’t have to deal with any stressful surprises down the line.
1. Choose the right business structure
The first step in setting up your agency finances is choosing the right business structure for your company. There are four main types of business structures: sole proprietorships, partnerships, limited liability companies (LLCs), and corporations.
Each type of business structure has its own set of financial rules and regulations. For example, sole proprietorships and partnerships are not separate legal entities from their owners, which means that the owners are personally responsible for all debts and liabilities incurred by the business. On the other hand, LLCs and corporations are separate legal entities from their owners, which protects the owners from being held personally responsible for business debts and liabilities.
2. Open a business bank account
Once you’ve chosen the right business structure, the next step is to open a business bank account. This will help you keep your personal and business finances separate, which is important for both legal and tax purposes.
When you’re shopping around for a business bank account, look for one that offers features that are important to your business, such as online banking and mobile check deposit. You should also compare fees so you can find an account that fits your budget.
3. Get a business credit card
Another good way to keep your personal and business finances separate is to get a business credit card. This will help you build up your business credit history, which can be helpful if you ever need to apply for a loan or line of credit.
When you’re choosing a business credit card, look for one with features that are important to your business, such as rewards programs and low-interest rates. You should also make sure the card issuer reports to business credit bureaus so you can build up your credit history.
4. Set up a bookkeeping system
Once you have a business bank account and credit card, the next step is to set up a bookkeeping system. This will help you track your income and expenses so you can see how your business is performing.
There are many different bookkeeping systems you can use, so choose one that’s easy for you to use and that fits your budget. Many first-time business owners choose to use Quickbooks or Xero because they’re easy to use and have a lot of features.
5. Utilize spreadsheets to stay organized
In addition to using a bookkeeping system, you should also utilize spreadsheets to stay organized. Spreadsheets can be helpful for tracking things like your income and expenses, as well as your invoices and payments.
It’s not uncommon for businesses to use both a bookkeeping system and spreadsheets. This way, you can get the benefits of both worlds: the ease of use of a bookkeeping system and the flexibility of a spreadsheet.
6. Hire an accountant
While you can handle your own finances, it’s often helpful to hire an accountant who can help you with things like bookkeeping, taxes, and financial planning. An accountant can also help you save money on taxes by taking advantage of deductions and tax credits.
There are numerous benefits to setting up your agency finances correctly from the start. By following these tips, you can save yourself time, money, and stress down the road. Don’t wait until tax time to get your finances in order – start now and thank yourself later!