Some female small business owners are very familiar with business finances and best practices for high profits. You may have an extensive experience in the private sector or you may have a college degree in finances.
Even with all that knowledge when many businesses transitioned to the online space some of the non-negotiables in building a business were thrown out the window. Working with women in business who have been doing it for years and some who are just starting out I have come to realize many have skipped steps in setting up their business for success.
Many women manage their family’s finances and are very familiar with budgets. When it comes to running your business it is very important to keep the two sets of funds completely separate.
Disclaimer: Truth Bomb Academy founders are not financial advisors nor accountants. Always refer to your financial advisor for advice on your individual business.
When I started my first business I was very confident with my financial knowledge and understanding of book keeping. I knew I needed to create the income minimize expenses which would equal a healthy net-profit.
I was so naive….
That first business taught me a lot and after a few more businesses my accountant was praising me. He educated me on many things, but I also learned some contrasting strategies that work even better.
Watch this short video for my 3 Steps:
Setting Up Your Business Entity
When should you set up and establish your business entity?
If you are talking to any of these three you might hear…
- Your Coach says, “Yes, right away.”
- Your CPA says, “You don’t need it right now.”
- Your Lawyer says, “Maybe.”
Are you confused yet?? Who is right?
Each one of them is looking at your business differently. Hence the reason for the different answers.
Your Coach is looking at your Brand and building credibility. Also, when setting up your business entity it tends to have a a shift in your mindset going from a great idea to an actual business.
Your CPA is looking at what tax advantages that would be available for the profit you will make. In their eyes you need to be making around 100K to benefit from the tax advantages.
Setting up an LLC or S-Corp does have expenses that may not be needed until the income warrants them.
Your Lawyer is looking out for your asset, liability and privacy protection.
Let’s take a closer look at each type. This is an important decision in setting your business up for profits. Also, keep in mind it can be changed later on.
Here is a good place to learn about the different business entities and why you want one or the other.
*Pro tip – You don’t have to set up your business entity in the state you reside in. 😱
The Money Game
Often when we start our business we are underfunded. Inside Truth Bomb Academy women are creating their Business Playbook. Learning to design their business through Self-Discovery, Business Idea, brand, audience, M.V.P., and team. All this gives them a good picture of their business and the impact it will have. Check out Truth Bomb Academy and choose the best approach for your business today.
Understanding your finances will help guide you in making wise decisions and keep the ‘shiny object syndrome’ in check. You don’t have to spend a lot of money to make money.
I want you to avoid the ‘Survival Trap’. I have heard the mindset of never showing a profit in business so you avoid taxes. When you operate your business check to check, you’ll find yourself in the survival trap, doing anything to generate revenue, even when it goes against your company’s vision and outside the bounds of your audience’s needs.
When we take a close look at what our actual expenses are and what income we need to create to not only cover those expenses, but also put funds in the other buckets we need to be profitable.
The traditional method of accounting commonly referred to as GAAP (Generally accepted accounting principles) tells us to evaluate our company by Income – Expenses = Profit.
The problem with that is it goes against our human nature. We more often than not take our income and spend it all. At the end of the year when the accountant tells us what our profit is we wonder ‘how we have a profit when our bank account is empty.’
That happens when we keep all our funds in one bucket (account) and pay all our expenses (business & personal) out of that bucket.
Inside Truth Bomb Academy women are realizing their profit and avoiding the ‘Survival Trap’ altogether. They are learning how to take Income – Profit = Expenses. Always take your profit from every sale.
This helps with setting realistic goals too. Looking at what your Fixed costs (Memberships, subscriptions, website hosting), and your variable costs are gives you an accurate picture for what you need to make immediately for income. Then consider the percentage of that income that will go in the Profit bucket, the Owner’s compensation bucket and the tax bucket.
We often get the question, “What bank should I open my business account at?”
From our personal experience, if you have a really good relationship with your bank, do business with them. Personal relationships in banking are important. With these relationships you can often get better rates and lesser fees.
To open any business bank account you will need to have an EIN, which ties back to the business entity that you establish. Once you have your business bank account you can then open merchant accounts like Stripe, Paypal, and Samcart. Making it easy to automate payments for your products and services.
To learn more about these merchant accounts check out this Blog Post by Chef Katrina.
You can learn more about it and apply for your EIN: https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online
Here in Truth Bomb we love recommending Relay Financial for a good business friendly bank. This is an online bank, but you can deposit cash or checks at certain ATMs. This bank has partnered with, Mike Michalowicz’s program “Profit First” and is the only business banking we know of that has you create multiple accounts for the different needs of your business. They provide automatic distribution of funds into your principal accounts. They have business saving accounts that you can use for taxes and profit accounts. (highly recommended)
Join Truth Bomb Academy
The money conversation is not always fun to have. Here in Truth Bomb Academy we love talking about the money and what it really means to manifest your dreams.
We are helping more women become millionaires without sacrificing what’s most important to them. We are reducing stress, teaching automation, and implementing real self-care as part of your business strategy.
Truth Bomb Academy is for women by women who understand the unique challenges women face. We give you access to proven business training and tools designed specifically for female entrepreneurs. Let us share with you a new pathway to becoming a fulfilled millionaire. Women swear by it!
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Yours Sisters in Business,
Heidi Mummau 🤩