Open Bank Accounts for Your Business
After incorporating your business and receiving your EIN from the IRS, you can open a bank account (or accounts). Take a copy of your articles of incorporation and your EIN to the bank. These are typically required to create a checking or savings account.
Obtain Extra Money for It
One of the significant obstacles that entrepreneurs face is securing startup funding. Because of their lack of track record, new businesses sometimes have difficulty qualifying for loans.
Initially, you, the business owner, may be required to guarantee a loan personally. This means having a high credit score and stable financial background is crucial. Credit applications submitted in the name of a company are still evaluated based on your creditworthiness. The bank has nothing to rely on save that your company is new.
Credit reports can be obtained from any of the three credit reporting agencies (Equifax, Experian, or Trans Union). Your FICO score is available for purchase through MyFICO and several credit bureaus. Your creditworthiness is quantified by a figure called your FICO score.
Before you decide to leave your current work, it is highly recommended that you get some early lines of credit. The reason for this is that obtaining a company loan will be challenging regardless of your credit score if you do not have a stable source of income. Some options for securing capital for your enterprise are outlined below.
The US government’s SBA provides financing programs for smaller enterprises. You should expect to spend a lot of time filling out paperwork and your time guaranteeing the loan.
Loans from your credit lines that you give to the company.
funding from loved ones
equity credit lines for homes
Get Credit Cards for Your Company
Getting a credit card in the company’s name is another financing option. The business can begin to build a credit history even if you have to guarantee the credit card personally. It’s helpful because it eliminates the need to submit numerous expense reports to get reimbursed for personal and company expenditures.
Use Credit and Debit Cards
Pay Pal is the most convenient way to take credit card payments from customers online because it does not require a merchant account or good credit. 1ShoppingCart is another excellent solution for online payment processing. A merchant account, used to accept credit cards in person, is granted to businesses depending on their creditworthiness.
Expense Tracking Program
Intuit offers a company accounting package called QuickBooks. This is simply one of several available accounting software options on the market. It’s recommended that you go with the option you feel most at ease with and are most likely to put into practice.
Create Paper Documents
Keep your paper files in order even though you’ll be using an electronic accounting system. The Internal Revenue Service expects you to keep your receipts as evidence of your income and expenditures.
After you or your bookkeeper have entered your financial records into accounting software, you can organize them in the following folders:
Utility Costs vs. Income
Loans from Banks
Receipts from Charge Cards
Items for the Office
So that no one file grows too huge, you can further partition these according to your account number.
Separate your business and personal files.
Despite the allure, you should never use the company checking account to cover personal expenses. Your private and professional documents must be kept in two different locations.
The protection afforded by a corporation or other form of legal entity might be nullified if the company and individual funds are mixed. In other words, if someone knew who you were (or pretended to be), they could “pierce the corporate veil” and have access to your assets.
In addition to protecting your privacy, keeping your business and personal information in two different places allows you to assess how well your company is doing quickly. It’s hard to tell how well your business is doing without including personal expenses like mortgage payments and business costs.
Keep Your Company’s Records In Order
Maintaining the company’s records is an ongoing responsibility. In addition to the financial records discussed in Chapter 2, the official corporate or company minute book also belongs here.
This logbook will be among the first items summoned by a plaintiff in a lawsuit against you if you have formed a legal entity to shield your assets. They may try to prove that you haven’t kept your business and personal lives separate and that you should be held personally accountable for the verdict (an argument known as “piercing the corporate veil”).
Maintain the Necessity of Filing
Filing the appropriate paperwork with the relevant authorities at the correct times is essential to keeping your firm out of legal jeopardy. The specific filing requirements for your company will vary depending on its industry and business model. However, the following are some common examples:
Income tax payments made on an estimated quarterly basis satisfy a portion of your annual tax liability to the Internal Revenue Service and your state’s revenue agency. References can be found at the end of Chapter 2.
Invoices for payroll taxes – You must submit them if you have employees (or have a payroll service handle it for you).
File annual or semiannual reports with your Secretary of State to keep your business legal.
Your business or organization must file a tax return yearly (in addition to your rescue, but by a different date.)
Recording Sales Taxes
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