Make a budget for your expenses ahead of time.
Even if there is still a lot to figure out, you may put together a budget for your firm in its first year. Once you have a concept, start making a list of the expenses you'll need to budget for: salaries, web hosting, server costs, and office or coworking space, of course, but also legal advice, CRM software, branding and customer acquisition costs, third-party integrations, outsource your accounting, and anything else you can think of to get started.
This will make it easier for you to distinguish between personal and business spending and prevent you from mixing the two.
Open a business account—or several—as soon as possible.
Separate your company's checking and savings accounts from your own checking and savings accounts as soon as possible when you establish a business. This vital stage ensures that your small business's expenditure is as simple as possible (especially useful come tax season).
It also makes your financials far more understandable to potential investors. Most angel investors, venture capitalists, and lenders won't bother to separate your personal and business costs; instead, they'll move on to a business owner who takes her finances more seriously.
Always use the correct card.
You'll waste a lot of time if you use your corporate debit card for groceries or other little personal expenses.
If you're having difficulties remembering which card is which, make a note of it or try opening accounts at a different bank with a different design to keep them separate. If you're unsure, err on the side of caution or seek professional advice (more on that later).
Your business card is not a form of payment.
It's easy to blur the line between personal income and business income as a founder who may or may not be paid a salary. Don't be swayed by this perilous incline. Transfer the amount you need from your business account to your personal account when you need to take a “owner's draw.”
Why? Consider the following scenario: you have a check payable to your company, but you also want to make an owner's draw transfer. Isn't it true that depositing business checks directly into your personal account saves you time?
Wrong. This will come back to bite you around tax season, when you find yourself unable to properly categories your business income and payments to you. It's also a red flag for any investors who are reviewing your financials.
Surround yourself with people who know what they're talking about.
Before a fundraising, new businesses have a lot of questions about accounting, taxes, and getting their finances in order. That's fine; this is difficult material.
Don't be frightened to seek assistance. It makes a tremendous difference to your firm if you have access to a team of financial specialists. Don't put off contacting accounting pros until your taxes are due or you find yourself in a legal situation. You'll benefit from professional guidance and access to their networks if you establish those partnerships early on.
