Tips & Tools to Starting Off on the Right Foot

Hey there, future business owners! If you are gearing up to launch a new venture, congratulations! Starting a business is exciting, but it's incredibly important to make sure your financial foundation is solid right from day one.

In my new business consultations, I spend a lot of time helping owners get their financial processes in order, making sure they have all their ducks in a row from a tax, pricing, and budgeting perspective. More often than not, these conversations happen during the first tax season after their first year of operating. Unfortunately, that usually means they end up with a surprise tax bill in the form of self-employment taxes, under-withheld income tax, and unexpected state business taxes.

To save you from that first-year tax time panic, I've put together the ultimate checklist. If I could sit down and talk to every business owner before they accept their very first dollar, here are the 8 best-practice steps I would give them:

Step 1: Open a Business-Only Bank Account

First things first: do not mix personal and business finances! Opening a dedicated business bank account is essential. If you want something simple to start, platforms like Found or Novo are great options because they have some basic bookkeeping and invoicing functionality built right in. While there are plenty of reasons why I would recommend something more robust in the banking and bookkeeping realm as you grow, these platforms are a fantastic, accessible place to start.

Step 2: Get Your Business License and Register for State Taxes

Before you officially open your doors (or your website), make sure you are legally compliant. Get your local or state business license sorted, and register for your state tax accounts. This ensures you're ready to accurately collect and remit sales tax or pay state business taxes without scrambling to catch up later.

Step 3: Track Your Miles

If your business requires you to hit the road—whether you're meeting clients, picking up supplies, or traveling to job sites—you need to track your mileage. Those miles translate to valuable tax deductions! If you do a lot of driving, I highly recommend using an app like MileIQ to automatically track and categorize your trips.

Step 4: Set Up Bookkeeping Software

Don't wait until tax season to organize your receipts in a shoebox. Set up a dedicated bookkeeping software early on. Xero is my absolute favorite and really the only one I recommend. It's affordable, incredibly responsive to user feedback, has great customer service, and most importantly, it can easily grow with your business over time.

Step 5: Do a Break-Even Analysis

You need to know your numbers if you want to be profitable—and if you want to actually be able to pay yourself! Do a break-even analysis on your products or services so you understand exactly what it takes to cover your costs. Planning ahead is the only way to ensure your pricing supports your business and your livelihood.

(Need help figuring out your numbers? Check out my Break-Even Calculator (to get started!)

Step 6: Set Aside 15-20% for Taxes

This is where so many new business owners get tripped up. Because taxes aren't automatically withheld from your income like they are at a traditional W-2 job, you need to proactively save for them. A great rule of thumb is to set aside 15-20% of your revenue (not just your profit!) in a separate Money Market Account (MMA) or High-Yield Savings Account (HYSA). Earning a little interest while you save for Uncle Sam is always a win.

Step 7: Limit Your Overhead

Keep things as lean as possible in the beginning. It's tempting to buy all the shiny new equipment, sign a lease on an expensive office, or pay for premium software subscriptions right out of the gate. Limit your overhead as much as you can until your cash flow is steady, predictable, and reliable. When I started out as an independent accountant, I bought a used laptop and splurged on Google Workspace and Canva Pro. As a service based business, overhead is naturally much lower than our retail or creative counterparts, but you can always optimize somewhere!

Step 8: Build a Runway Before Running Payroll

Hiring a team is a huge milestone, but do not make payroll commitments without having at least a 3-month runway in the bank. Your employees will be relying on you for their livelihood, and having that cash buffer ensures you can confidently meet payroll even if you hit a slow month.

Need a Little Extra Guidance?

Starting a business is a wonderful journey, but you don't have to navigate the financial side alone! If you want to make sure your processes are set up correctly before you launch, I'd love to help. Whether you need a full strategic roadmap through my Consulting Services or just want to bounce a few specific questions off me via a Quick Call, I'm here to ensure you start your business on the right foot.

With enthusiasm,

Shelby Stennes