I’ll admit it, I’m a numbers geek.
My sister and business partner, Karen, lovingly (and often) calls me a Nerd. So I’m the one responsible for the back-end stuff, including the business checking account.
When we started blogging, we had NO idea we would eventually open a brick and mortar store.
I remember we started our DIY blog in October 2013. Once we decided on a name and purchased an affordable logo on Etsy, I had to learn how to build a website and I had to create business pages on social media.
Once we got that up and running, we started working on DIY projects and blogging about them. We quickly realized our followers wanted to purchase the items we were working on.
As soon as I realized we were going to start making money, I opened a business bank account. It wasn’t much, I’m sure. Maybe $200.
I didn’t question why I did this, I just did it. The nerd factor probably comes in play here though. I like to analyze data and how could I analyze The Salvaged Boutique’s data if it co-mingled with my personal checking account activity?
In Ohio (and this can be different in each state), I quickly learned we needed two things to open the account.
- An EIN (this is FREE and simple to apply for with the IRS)
An Employer Identification Number, or EIN, is to a business what a social security number is to an individual: It’s a unique identifier that’s used for taxation and other purposes. Depending how your business is structured you might not need one to open a business checking account, but it’s often useful to have even when it isn’t mandatory.
- A Business license – sometimes called Articles of Organization; We applied and filed this with the Ohio Secretary of State
Now that we’re going into our 5th year of business – the third in our store, I’m so GRATEFUL I kept my personal finances separate from the business.
If you’re starting a business in Ohio, click here for a simple Road Map to starting a business in the state.
Why am I grateful I kept my personal finances separate from my business finances?
- Because we bootstrapped.
It was important to know that if we paid ourselves or reinvested in the business, the dollars came from the business itself – not from my own finances. You see, I was working full-time until recently.
- Because it made bookkeeping for the business easier to handle.
Soon after opening the business checking account I learned about online accounting software and I had all of our accounts (Etsy, PayPal and Checking account) synced into the accounting program so I wouldn’t have to manually enter in all of our activity. This is a huge time saver and worth another blog post in the future.
- Because we can easily run financial reports for each year we’ve been in business.
This is VALUABLE. We can see how we’ve grown, where we made mistakes, where we corrected them, we can see that we are now starting to make a profit.
People cringe at the thought of handling their own bookkeeping and accounting. Maybe you aren’t a numbers geek like me. I get it! Whether you do it yourself or you delegate it, is up to YOU. But don’t underestimate the value of tracking your business finances EARLY on. For me, the easiest way to do this was by starting a separate account.
Let me also add this. You can do all of this for FREE.
I shopped around for a FREE business checking account. There are banks that offer them, really, with no strings attached. I also found an online accounting program that is FREE.
So if you think checking accounts are expensive and accounting programs are costly, think again. We’ve had these programs for 4 full years and they are still FREE.
How do you handle your business finances? Did you follow the same path? Do you handle it differently? Do you want to know more about the FREE tools I use? Comment below or contact me and tell me about it.
If you are looking to be a savvy business owner, this is the place for you.
Want to engage with fellow shopkeepers? Join the Savvy Shopkeepers Facebook Group. (You must own an online shop or brick & mortar store to get access to the group)
I look forward to sharing how I’ve been able to help build, market and manage a retail store with my sister—all on a budget. ~ Kathy