4 Smart Money Moves Small Business Owners Should Make from the Start
Posted: March 15, 2021 | Word Count: 721
Most small business owners start their business to pursue a passion, not to crunch numbers. However, it’s important to get the finances right in the beginning to have the best chance at success. If you’re not a numbers expert, you may need the help of an experienced professional, because accurate taxes and bookkeeping can help you avoid missed deductions or costly mistakes.
“If you’re thinking about starting your own small business, also think about getting help from day one,” said Ian Hardman, General Manager and Vice President of small business at H&R Block. “Block Advisors small business certified tax pros can help you make sound tax and financial decisions, guiding you to better outcomes so you can focus on what you love.”
Here are four smart money moves to make when starting your small business.
It costs money to start a business, so if you can’t personally cover your start-up costs, you’ll have to secure financing. This can be difficult, yet proper financing is one of the most important elements a company needs to succeed. Also, how you choose to finance your business could impact how you structure and run your business.
There are numerous financing options — not just the traditional bank loan. In fact, the U.S. Small Business Administration (SBA) outlines several small business funding options. One thing to note: you’ll need a strong business plan and an accurate view of your financial situation and runway before you start.
Choose the right entity structure
Your business structure impacts everything from your day-to-day operations to your taxes and personal liability, so it’s important to choose the business structure that provides the best legal protection and least amount of tax responsibility for your business type. Many small businesses start as a sole proprietorship or limited liability company (LLC). However, do your homework before deciding which structure makes the most sense for your business.
Set up a business bank account
Separating your business and personal finances is a must. It’ll make your accounting, quarterly, and end-of-year tax filings easier if there is a clear divide between your business and personal funds. Plus, a dedicated business account helps provide proof to the IRS that you’re running a legitimate, money-making operation.
Before deciding to open a business bank account, evaluate your options to identify banks that specialize in helping new and emerging businesses. H&R Block’s subsidiary, Wave Financial, offers a business bank account and debit card with built-in bookkeeping, with no monthly fees, account minimums, transaction fees, or ATM withdrawal fees if you withdraw from its network of 55,000 surcharge-free ATMs. Wave Money offers fast access to payments, automates bookkeeping and creates tax-ready records, freeing entrepreneurs from time-consuming administrative tasks.
Track your start-up expenses, including mileage
Every dollar counts when you’re a small business owner. If you're even thinking about starting a business, keep track of your miscellaneous expenses, including mileage, while you explore your options. You won't get to deduct these costs immediately, but when your business flips the “on” switch, you may be able to capture them on your taxes as start-up expenses.
If you use your car for both personal and business purposes, you must divide expenses based on the percentage of actual mileage driven for each use. Using a mileage and expense tracking app, like Everlance, can make it easy, both on you and your tax advisor. Block Advisors and Everlance have partnered to offer small business owners an opportunity to save money — discounted tax prep with an Everlance premium account.
“We understand that the financial aspects of running a small business can seem overwhelming, but Block Advisors can be your partner in figuring it out. We’re here to help take on some of those important financial tasks so you can focus on building your business,” Hardman said.
Block Advisors, a team within H&R Block, is dedicated to meeting the tax, bookkeeping and payroll needs of small business owners year-round. To start working with the tax experts at Block Advisors, visit blockadvisors.com.
Our small business tax professional certification is awarded by Block Advisors, a part of H&R Block, based upon successful completion of proprietary training. Our Block Advisors small business services are available at participating Block Advisors and H&R Block offices nationwide.