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Is this year going to be the year you finally start your new business? Or have you gotten off track and are ready to take your business seriously again? This post includes a simple business checklist for starting your new freelance career!
According to a study by the SBA, over 50% of the population works in a small business, and since 1995 small businesses have generated over 65% of net new jobs in the U.S.
If you’re ready to join the workforce as an online business owner, use this checklist of the top tips for starting a new business in the New Year.
1. Start a side hustle as an experiment
If you’re still unsure of what kind of online business to start, or what services to offer, the best thing to do it launch a lateral side hustle. Offer your skills and talents based on past experience from work that’s already in your resume.
You can test out your idea, start charging for your services, and see what kind of clients want to work with you. Maybe you want to offer virtual assistant services, or become a freelance writer.
But will either of those freelance businesses actually make you money? A side hustle is the perfect way to experiment and find out before diving in head first and ending up broke or in debt.
2. Open a separate bank account
You want to put opening a separate business bank account towards the top of your to-do list. Why? Well, for one it’s the quickest way to separate your personal transactions from your business ones.
In the event you get audited, you don’t want the IRS sifting through your personal account while trying to find your business expenses. This also applies to handing over your bookkeeping each month to your CPA.
You want to see all the tax deductions your business is eligible for and a separate account makes this easy. But don’t give anyone more access to your banking information than they need.
Once you have your new bank account in place, you might consider accepting credit cards. New technology makes it possible to turn your smartphone or tablet into a credit card reader, so that you can accept payments from anywhere. This money can then be directed into your business account, making it easier to keep track of.
By giving customers more payment options, you can expand your business by making yourself more accessible and, hopefully, cut down on the number of payment problems that you run into in the future.
3. Set aside money for quarterly taxes
Speaking of taxes, as a freelance business owner you are now responsible to pay quarterly estimated tax payments. After opening a separate business checking account, it’s a good idea to also create a separate tax savings for estimated taxes as well.
While this may not be a fun expense (trust me, I have to bring in at least $1,000+ just to allocate towards tax payments) it’s none-the-less an important part of being a business owner.
There are consequences to skipping paying quarterly taxes, in the form of higher taxes, late payment penalties, and other fees. Don’t give the IRS more of your hard-earned money than you have to — set up a routine for paying quarterly taxes now.
4. Establish a flexible work-at-home routine
No matter what kind of business you’re building, you have to establish a regular work routine from the beginning. This is the only way you’ll be successful and able to efficiently grow your revenue.
Limit distractions by using apps like Rescue Time or FocusBooster so you can be most productive with your time throughout the day. When you’re the boss your attention will be pulled in multiple directions so you need:
- A way to keep track of to-do’s using a task management system
- A calendar or paper planner to keep track of appointments
- A playlist of music that helps you stay motivated and on task
5. Find a dedicated workspace
Along with establishing a regular routine you also need a dedicated workspace to be productive. I say “need” because it’s seriously one of the biggest mistakes I made when I ran my freelance business, and wish I had changed it in the beginning.
Your work zone matters to how much money you make and what kind of mood you’re in. So take this point seriously!
We’re not all lucky enough to have an entire home office room to ourselves, but do what you can to get a corner of the room where you can at least close the door. Otherwise you may want to consider a co-working space or regular coffee shop visits to get your work done.
6. Keep track of your time
When launching an online business your time is money, so spend it wisely. Too many budding freelancers forget to clock their time, and miss out on much-needed revenue in the beginning stages. Don’t let this happen to you!
There are lots of ways to track your time, from a simple spreadsheet, app, or within your bookkeeping software (if you use something like FreshBooks). However you clock your hours, just make sure you’re not short-changing yourself.
7. Set up a recordkeeping process
There are numerous benefits to proper recordkeeping, from less wasted time on admin tasks, to higher tax deductions and credits. Start testing out the best tax accounting or bookkeeping software that offers features you’re looking for.
Most of them should include features like tracking inventory, payroll, recording tax deductions, and printing regular reports.
Set up a regular bookkeeping process to prove your new business venture is legit. Hiring a part-time bookkeeper should only cost a few hundred dollars but save you some serious headache and money in the future.
Then set up regular meetings with your accountant or bookkeeper on a monthly or quarterly basis to check in on the progress of your company’s cash flow, revenue, and profit and loss. Knowing where your business is now, and where it’s headed, will give it the best chance of succeeding.
8. Outsource small tasks
Even if you’re new to the freelance game, please know that you don’t have to do everything yourself. Don’t be afraid to outsource small tasks or hire a contractor for short-term work.
I know what my strengths are any none of them include coding or designing a website. So I hire a tech guy and a web designer to help with those things.
Even if you’re a newbie VA yourself, you could still work with an assistant a few hours a week to help manage your client load and task list. There’s no rule that says you have to go it alone when starting a new business.
As someone who launched my own business four years ago, I know what it’s like to have an idea but struggle to see it through.
Use these tips as a step-by-guide for starting a business and actually start making money this year — even with no experience or a lot of money! And be sure to download this starting a business checklist.