Setting Up Your Business Financial Structures

An important, and often overlooked, first step in organizing your new business, is to setup all your financial structures that will control the flow of your money.  In this topic, we will cover many of the back-end infrastructures that should be in place to allow you to successfully conduct your business.  Some of this may seem obvious, but you’d be surprised how many people forget about them.

1.  Business Checking and Saving Accounts

If you own a business, you will probably need to pay bills and collect money from customers.  Establishing a business checking and savings account is a must.  This allows you to separate your personal and business monies which allows for easier accounting.

Most banks have various business checking account packages available depending on your monthly check writing usage.  For small companies, you should be able to find banks that offer packages with no monthly fees.

You should search the Internet for local banks to see what services they have to offer. They are sometimes very competitive and will try to match other banks in order to get your business.

SUGGESTION:  Smaller companies might want to open two checking accounts (especially if they have no monthly fees).  Why? If you sell on eBay, you will most likely use the payment service called PayPal.  While this is a beneficial service for both the buyer and seller, there are many hackers out there that try very hard to steal PayPal account numbers.

I have personally be a victim of a PayPal scam where my wife received an e-mail requesting her to verify information within our account by clicking on the link in the e-mail.  A few days later, my checking account was drained of about $1000.

While the representatives at PayPal and my local bank were very responsive in refunding the money that was fraudulently taken, I needed to then close that checking account and open a new one.  I also needed to order new checks, redo all my on-line banking and change all my on-line accounts that referenced the closed account number.  Quite a hassle!

The addition of a second checking account helps remove some of the hassle should your account be stolen.  Have one checking account as your primary one.  This account is used for check writing and bill payment.  The second checking account can be the one given out to agencies such as PayPal.  By linking up your bank accounts, you can always move the money from one account to another from your secure web browser.

If the PayPal checking account gets stolen, just close it and open another one.  There will be far less steps and headaches than if your primary checking account was stolen.

2.  Business Credit Card(s)

A business credit card will allow you to purchase goods and services for your company and keep them separate from your personal finances.  Again, this is good for tax reporting.  It’s also a good way for someone starting their first business to establish credit.  Establishing good credit will allow you to request credit-lines in the future.

Do your research with the business credit cards.  There are many of them out there that offer different incentives, such as money back, frequent flier miles and points towards special gifts.

Choose the one that best suites your tastes and needs.

3.  Resellers Certificate

If you are going to need to do business with a wholesaler or distributor, they will normally require you to submit a Resellers Certificate when you open your account with them.  This certificate allows you to purchase goods from them without paying sales tax.  It will be YOUR RESPONSIBILITY to collect these taxes from your buyers when they order from you.