You got into weddings because you love creativity not because you love numbers. So we asked our friend and financial guru Amy Northard to share her wisdom with us because there is more to running a successful wedding business than just planning beautiful weddings.
Starting your wedding business off on the right foot makes things run so much smoother down the road. I’ve got four financial tips for you to put into practice and whip the money-side of your business into shape. If you’re new to running a business (really of any kind), treat this list like a checklist. Start at the top and work your way down. If you’ve been in business for a while, use this list as a resource to double-check that you’ve got great money systems in place and that you are on the road to profitability. This will cut down on stress not only at tax time but also throughout the year.
1. Open a separate business bank account
It’s super easy to make business purchases out of your personal account and toss the receipt in your purse, but I promise you’ll thank yourself at tax time if you get rid of this bad habit. If you’re a sole proprietor (the default business structure), you can go to your bank and set up another personal bank account using your social security number. If you’re any other form of business, be sure to take your business formation documents, federal ID number, and anything else your bank may require. Call the bank or check their website for a list of information you’ll need so you don’t have to make multiple trips. Once you have this account set up, only use it for business.
2. Choose a cloud-based bookkeeping program
With cloud bookkeeping programs like Quickbooks Online, Xero, and Wave, you can automatically import and categorize your transactions. This is a huge time saver when you compare it to manually entering everything into a spreadsheet. Once the transactions have imported into whatever system you choose, assign them each an income or expense category. Once you’ve done that for all the transactions in the month, do a reconciliation (which is like balancing your checkbook). Go through each transaction in the bookkeeping software and match it up to the bank statement down to the penny. The programs mentioned above all have tools built in to make the reconciliation process very easy.
3. Don’t put off the bookkeeping until it’s time to file your taxes
No one likes that stressed out feeling when they have to go back through a year’s worth of transactions and make sense of it all in order to get their annual tax return filed. Put a monthly money meeting on your calendar and treat it like a client meeting. Show up and get your monthly bookkeeping done and off your mind. If you have to bribe yourself with a trip to Starbucks to get it done, do it.
4. Set aside some money for taxes
No one likes getting a huge tax bill at tax time, so I always recommend setting aside about 30% of the income left after your business expenses are taken out. Put this into a separate savings account so you don’t think of it as “spendable money.” The government asks that if you plan to owe more than $1,000 on your federal income tax return, you should send in estimated tax payments each quarter. While it is optional to make these payments, you will be assessed interest and underpayment penalties if you owe more than $1,000. Most states have a similar rule so make sure to look into what the regulations are in your state. Implementing these four financial tips into your routine will reduce your stress and set your planning business up with a good money foundation. You won’t need to fear growth because you’ll be ready for it.