After you’ve decided on the type of entity that you’ll operate for your business and filed the necessary business documents such as business licenses and permits, the next step would be working on more administrative part of your business.
When operating a business, there are a few more administrative task that you have to complete. These are obtaining business accounts such as your checking and credit cards, obtaining the necessary insurance and finding financing if you need one. If you are planning on selling products, you may also want to inquire opening an account with various wholesale companies.
Open a Business Bank Account
You need to ensure that your business funds are separate from your personal funds in order to completely keep track of your business income and expenses. Â If you are only using one checking account for your business and personal matters, it will be very hard to separate which is which. You can do it but it will take more time. In addition, you have to allocate shared expenses such as bank fees between your personal and business. Remember, you cannot deduct the full bank fees on your business return if you are also using it for personal purposes. Having a separate accounts for your business and personal financesÂ will also help you during tax time especially if you are using various financial software to import information for your business.
Open a Business Credit Card Account
Separating your personal accounts also applies to your credit cards. Having a separate credit card from your personal is needed so you can keep track of your business expenses. Not only that, you need to be able to identify the interest expense for your business that will be much harder to do if the expenses are commingled with the personal ones. The credit card interests for business expenses are deductible while personal interest expenses are not. It should be noted that when opening a credit card, some companies require you to personally guarantee the business credit card under especially if you have just started the business.
Obtain the necessary Insurance
To protect and limit your business from certain liabilities, you need to obtain certain insurance before you operate your business. Depending on the type of business that you have, you may need to obtain insurance such as liability insurance, errors and omission bonds, malpractice insurance, fire/hazard insurance, workerâ€™s compensation (if you are planning on hiring employees),etc. If you do not know what applies to you, it is best to consult an attorney or a business consultant on various of the risk that you’re business will be facing.
Where to Find Financing if you need one
While most home-based businesses require very low start-up costs, however, there are still quite a few that require start-up capital to use as a working capital or to purchase inventory and equipment. In addition, you may not need financing during start-up but you may need one when you are trying to expand.Â Here are some ways to finance your home-based business.