When opening a business, not only is your business important but managing your money is also important. Getting paid and keeping the books straight can be a challenge. You need to know bookkeeping, money management principles, bank statements, tax forms, and understanding credit. You could hire a bookkeeper or an accountant, or simply just try this yourself.
Here’s a good place to start:
- The first thing you need to do is open a commercial bank account. Shop around for a friendly bank or credit union.
- Then set an appointment to open the account. Make sure to take all the necessary papers with you such as personal identification, business name registration papers, and business license.
- If your credit is good, make sure to ask about a line of credit for the business.
- Also, ask about a credit card merchant account. There are many different ways customers will pay, so you’ll need to provide them with these options (cash, debit card, credit card, electronic cash).
Remember, there are fees:
- Account fees
- Transaction fees
- Equipment rental fees
- Merchant fees
If customers pay in cash, you’ll need to give them a receipt so you have some sort of paper trail. If they pay by check, make sure the date is correct and the written amount is the same as the numerical amount. Always get their driver’s license number and put that on the back of the check. Accepting credit cards are also good for the business. This can increase your business by 50 percent. Accepting credit card payments online, over the telephone, by mail or in person will come with a fee…but this is profitable for the business.
- Some businesses require advance payments, especially if the business is a service business.
- Another payment option is a progress payment (arranging payments due at various stages of the project).
- Another option is extending credit, if you deliver a service that is billed monthly.
All of these start-up tips for managing money for your business should be helpful and provide you with different options for a successful business.
YOUR CHALLENGE: How good are you at managing money? For one week keep a record of where your money is being spent. How is it impacting your business?