Start Your Business The Right Way
Can you believe autumn is here… and so is the latest edition of Bean There, Done That?
In this edition, we discuss the many WRONG ways to start a business – and, of course, we describe how you can avoid making some all-too-common mistakes when you’re getting your company up-and-running.
Once again, thanks for making DK/RK Services your first choice in bookkeeping… and for passing this edition on to your many friends who’ll want to subscribe for a “monthly smile.”
Wishing You Heaps Of Fun, And A Healthy Serving Of Beans.
Start Your Business The Right Way
Bean There, Done That
Monthly Bookkeeping Wisdom From Your Friendly Bean-Counter
Here’s a true story, as far as you know:
Wanda had a job with Acme Weed Pullers, pulling up weeds and pulling down a decent hourly wage. But her employer, “Bossie” Bertha, was kinda mean. Bertha seemed to have adopted unkindness as a lifestyle choice. So one day, Wanda had had enough.
“I’m not pullin’ one more weed for that lady,” she said to herself, just before she called up Bertha and said “I’m not pullin’ one more weed for you.”
Wanda decided to go into the weed pulling business for herself. “How hard could it be?” she asked herself, just before she turned to her cat, Spuds, and asked “How hard could it be?”
After all, Wanda and her weed-pulling colleagues had been doing all the work, but Bertha had been enjoying all the profits of their labor. Now Wanda would be her own boss and keep all the profits for herself.
After about eighteen months of business, during which Wanda had pulled up tons of weeds and pulled down a few nice checks from her new clients, Wanda took a look at some notices she’d been getting from the IRS and asked herself, “How’d I end up with such a confusing mess I don’t know how to file my taxes?”
Shortly thereafter, Wanda paid a visit to her Friendly Bean Counter (FBC) (me) and asked, “How’d I end up with such a confusing mess I don’t know how to file my taxes?”
The answer, though painful, was simple: Wanda hadn’t started her business in the right way, and certainly hadn’t been running it in a businesslike fashion.
Her FBC explained patiently and kindly (way more kindly than Bertha would ever be) that, the next time she started a business, Wanda ought to make sure to follow some basic practices that would keep her out of trouble like this – all of which her FBC would be happy to help with:
Choose, and use, a good accounting system. Find the system that works best for your business, and enter all your revenue and expenses in a timely fashion. If you’re not sure which system is best (Wanda was using her imagination, which is not an approved accounting system), get some expert advice from your FBC.
Set up your accounting system to work specifically for you. Wanda had one account – her personal checking account – and in just a moment, we’ll describe all the ways that was not her best move. Instead, starting your business on the right footing means setting up your accounting system with the right “chart of accounts.” Your accounting software will generally ask you a bunch of questions, and based on the answers you enter, it will set up a very general list of accounts for your business (rent, phone, mileage, clown parties, etc.) (just kidding on the clown parties) (unless you’re in the clown party business). But you can customize your chart of accounts to meet the specific needs of your company – especially with a little coaching from your FBC. (Your FBC might even do the customization for you.)
Draw a solid line between your BUSINESS and PERSONAL expenses and income. The IRS is very picky about this kind of thing. You can’t “co-mingle” your business and personal finances! So first, make sure you have separate business and personal checking and credit card accounts. When you take money from the business, record it in your program as a “draw” or salary; when you spend money, if it’s for a legitimate business purpose (no, Wanda, spa days are not really legitimate expenses for a weed pulling company), make sure to pay those expenses out of your business account and keep clear records. Every penny of Wanda’s funds were “co-mingled” in her single checking account, making her business accounting and tax reporting a nightmare.
Make sure everything is set up in compliance with tax obligations. If you have employees (Wanda dodged a bullet here), you have to have everything set up to pay payroll taxes and comply with other employer regulations. Your FBC can provide some very helpful advice in this area. And it’s way more reliable than Wanda’s imagination, I can assure you.
Find providers who can help you. You’ll want to consult your FBC, of course, and she will also have good referrals for you to pros who can help you with payroll processing, merchant accounts, tax advice and filings, and even things like hiring and marketing. Get a good team in place! Wanda had nobody to help her. Except her imagination. And Spuds.
I’m happy to report that Wanda’s situation is totally made-up, as is Wanda herself. But trust me: There are stories like Wanda’s unfolding all the time, and it pays to get your business off the ground the right way by setting everything up before you start co-mingling funds or otherwise getting into a big bookkeeping mess that makes it impossible to tell exactly WHAT is going on with your company.
Questions? Feel free to reach out to your FBC for a consultation.
The business you save could be your own!
- 1Have you ever met a cat named Spuds?
- 2Was it at a clown party? Post a short video
- 3Do you know someone who’s planning to start a business, and could use some expert advice from your FBC on setting things up the right way?
Don’t forget: at DK/RK Services, you’re always “more than a number.” We WANT to take care of your bookkeeping, professionally and personably, so you can focus on running and growing a great business enterprise! Please check out our many enthusiastic FIVE STAR online reviews (Yelp, Google, Facebook, you name it). We look forward to earning our next great review from YOU.
You know someone who could use valuable bookkeeping insights… or, at least, a smile.
You know you do.
Forward Bean There, Done That to them… if they subscribe, you both win a prize!*
(* Prize is FREE editions of Bean There, Done That)
(Offer good throughout the Lower 48, as well as certain U.S. holdings in the Pacific, but definitely not in Spuds, Florida. See details on the Spuds, Florida social media page. I bet there is one.)
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Sadie’s Paw Prints
New Family Member?
Have A Health Plan
Sadie here, Dottie’s faithful canine companion and chief advisor on all things furry. This month, I’d like to offer a few thoughts on making sure your new pet has a clean bill of health and a robust future full of doggy vitality.
When she looked up at you with those big puppy dog eyes – literally – you knew you just had to add “Ruffles” to your family. And why not? Families are happier when there’s a dog around. Some scientist has proven this, probably.
So right away, find a good veterinarian for Ruffles. Do this within a few days of bringing the little furball home.
If you can get records from Ruffles’ previous home about her health history, that’s great – her new vet will want to read all about her.
Finally, get that first vet visit scheduled right away. Make sure the vet can identify any health concerns, and get advice on how good a match she is for your household. This is especially true if you already have a faithful fur baby, and Ruffles will be a “bonus” dog. Are they compatible?
As far as I’m concerned, the more the merrier. You can’t have too many dogs. (Well, if one of them starts sniffing around MY bowl, maybe.)
It’s Election Time!
(No, Not That Kind)
Frequent readers of Bean There, Done That know that we have some favorite non-profit groups we like to support in every way we can.
One is Angel Covers, which helps “cover” the needs of children all over the globe. And the other, the Katie Adamson Conservation Fund (KACF) does the same thing for animals and the global environment.
Both extremely worthy causes!
I mention this, because time is running out (by Halloween) to vote for these outstanding non-profits here:
When you write glowing reviews for Angel Covers and KACF on the Great Non-Profits website, you help them earn a “Top Rated” badge, which goes a long way toward helping them build credibility and earn the attention of donors.
(Yes – you can vote for both!)
Great Non-Profits is one of the best places for people to share their stories of the wonderful work done by these dedicated organizations. And who knows? The story you write might end up in the marketing materials for either organization – or both!
Either way, it’s a no-brainer, and a no-cost way to help our friends – people who work tirelessly to make our world a better place.