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Starting a blog or small business can be exciting and self-liberating. From branding to creating the perfect website, we can sometimes ignore the not-so-liberating part of a small business, the finances. From day one, it is imperative to have a solid financial plan in place. Here are four small business financial tips that can help you start a solid financial foundation for your blog from day one!
First and foremost, open a business checking account and keep it separate from your personal checking account. Do not use your personal checking account for blog finances. Whether you are an LLC or Sole Proprietor, it is vital to maintain two separate accounts. With a business checking account, you can track your blog revenue and expenditures easily, and all in one place. This is extremely helpful once tax time rolls around. By establishing a business checking account, you can easily track the money you have made and the money you have spent. And without incorporating your personal finances.
If your blogging income is over $400.00 per year, you must report it to the IRS. While you may not reach this amount in the first few months, it can sneak up on you relatively quickly, and possibly before you even realize you have hit the minimum income requirement for filing.
The best practice is to set taxes aside per month based on any revenue you made. An excellent starting percentage would be 25-30%. Subtract this amount per month from your business checking account balance in your checking register or financial app, whichever you use. Create a simple spreadsheet or document that tracks each amount you have saved per month.
Now, at the end of the year, you already have money to pay your taxes, and you’re not struggling to find the money to pay. Also, it is a great way to determine next year’s taxes!
Being organized is another excellent way to keep your business finances from getting out of hand. A great way to keep all your invoices and receipts organized is to have a helpful filing system in place. Create a separate folder for invoices and a separate one for receipts. You can even separate receipts into categories, i.e., office supply expenses, continuing education expenses, anything you purchase to run your blog or business. Having a filing system makes it easier to get your hands on individual receipts when needed to file taxes. All your receipts are organized and all in one place. This will keep you from scrambling at the end of the year trying to locate receipts.
Keeping your bookkeeping up to date will save you from being stressed when tax time comes around. Who wants to do all that at the end of the year? Personal taxes are stressful enough! Schedule a day out of the month when you can commit to working on your business taxes. Take time to organize files and receipts. You can also review sales for each month to ensure you did not forget to put aside taxes.
As you can see, staying organized and implementing these four small business financial tips from day one will save you time and energy and cause you to have less stress. You can then focus on the most crucial part of business ownership, growing your business!
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