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5 Steps to Create a Solid Financial Structure for Your Business
1. Separate business and personal finances (no more commingling)
One of the best things you can do is to separate your business and personal finances.
Did you know that some banks, if you’re operating your business out of your personal checking account (even if it’s a second personal checking account), can shut your bank account down?!? Then it’s quite a process to get access to your funds again. I’ve seen it happen and it’s an experience I wish upon no one.
It’s really hard to tell how your business is doing and it’s impossible to have clean bookkeeping if the two are commingling.
You’re also putting out the energy into the Universe that you don’t believe your business will take off and be able to bring in enough to support your business.
If you’re an American, Relay Bank is a great choice due to their no fees and the fact that you can have multiple checking and savings accounts to make managing cash flow even easier (you can implement principles from Profit First due to how they’re intentionally structured their business).
You can view my Business Bank Account Analyzer (Canadian & American options), to more easily compare which business bank account will be the best for your needs!
2. Open a business-specific savings account for taxes
Having enough money for taxes and not being really behind on paying your taxes, is really hard to do if you don’t even have a separate account to set money in to be prepared for taxes.
This is so important that I require all of my entrepreneur financial coaching clients and bookkeeping clients to have a Tax Savings account so they have the structure set up so they can set money aside to be prepared for tax time and/or quarterly estimates.
3. Set up a My CRA online business portal
This is where you can see your tax story, filing statuses, actually file your GST/HST & really important info about income tax & sales tax, etc.
Start setting up your account, then you’ll get to the screen where you can’t go any further and have to wait to receive a confirmation code from CRA (for security) so you can finish setting up your online My CRA business account.
You should receive a code from them in about 7 days.
Typically they ask for a specific number off your most recent tax return (such as line 15000) to confirm your identity (I recommend looking and finding your tax return or reaching out to those who did your taxes last year as they might be able to find that number even quicker if it’s holding you back).
4. Get your bookkeeping up to date & keep it updated at least monthly.
If you don’t have anything in place for bookkeeping and you’ve got a business that’s pretty well established, reach out to me about Done for You Bookkeeping (you can book a free call with me here).
If your business is newer, or smaller, or you really want to keep doing your own bookkeeping, check out my Tax & Profit Planner for DIY bookkeeping.
Set money aside for taxes in your tax savings account (either a percentage of every sale, ex: 15% or ~25% of your net profit. If you’re not sure how to determine your net profit – that number is calculated based on your total sales – business expenses. We actually let our bookkeeping clients know each month when we send their reports, how much to set aside for both income taxes and sales tax like GST/HST and/or PST [if applicable])
Want more helpful tips for running the behind-the-scenes and financial side of your business? Join me on Instagram @intentionallywealthyco!
Other Great Blogs You May Like:
- Questions to Ask When Hiring a Bookkeeper
- The Process of Working with a Bookkeeper
- Questions to Ask When Hiring an Accountant
- Bookkeeping Responsibilities for Canadian Entrepreneurs
- Documents Your Accountant Needs to File Your Taxes as a Sole Prop in Canada
5. Pay yourself consistently
If cash flow is tight, you can start by paying yourself weekly and working your way up to two times a month (that’s the number of times I like my entrepreneur financial coaching clients getting paid from their businesses a month, that also works really well for managing their personal finances)
If these feel difficult (as I understand there are multiple steps involved in many of them), reach out to me!
This is exactly what I help my entrepreneur financial coaching clients with (cash flow management, paying themselves, paying taxes & previous years’ taxes if they’re behind), all of these little intricacies that can be challenging.
Click here to read more about our DFY bookkeeping services and here to book in for a free discovery call to talk about outsourcing your bookkeeping.
Wanting help with managing your cash flow as an entrepreneur? You can read more here about how I help my financial coaching clients with this.
Want to really dive into improving how you manage your personal finances too? Check out the Intentionally Wealthy podcast!
