Don’t Start a Business Without Knowing These 5 Financial Basics
Starting your own business is exciting……but also a little terrifying. You’ve got the ideas, the passion, maybe even a logo. But before you dive into designing your website or printing business cards, you need to get your finances in check.
If you’re like most new entrepreneurs, you probably didn’t start your business because you love accounting. But here’s the truth:
👉 Understanding a few financial basics can be the difference between success and struggle.
Let’s walk through the five financial basics every new business owner needs to know - because skipping these can cost you time, money, and peace of mind.
💡 1. Separate Your Business and Personal Finances
This is the #1 mistake new business owners make: mixing personal and business money.
Why it matters:
You’ll waste hours trying to figure out which Amazon purchase was for your office and which was for your dog
It complicates tax time (and can trigger IRS red flags)
It makes it hard to know if your business is actually profitable
What to do instead:
Open a dedicated business checking account
Use a separate debit or credit card for all business purchases
Connect your account to an accounting software (more on that in a sec)
💡 Pro tip: If you’re operating as an LLC, this separation also helps maintain your legal liability protection.
📊 2. Know Your Income, Expenses, and Profit
This might sound obvious, but you’d be surprised how many small business owners don’t actually know if they’re making a profit.
You need to know:
Revenue: How much money you’re bringing in
Expenses: What it costs to run your business
Profit: What’s left after expenses
Why it matters:
You could be bringing in $5,000 a month and still be losing money. That’s why profit > revenue when it comes to measuring your success.
💡 Use accounting software like QuickBooks Online or Wave to track these numbers from day one. At Breakspears Bookkeeping Services, LLC, we help you understand these reports in plain English—no accounting degree required.
📅 3. Set Aside Money for Taxes (Yes, Even If You’re Just Starting)
No one wants a surprise tax bill. But if you’re earning income and not setting money aside, that’s exactly what you’re risking.
Rule of thumb:
Put aside 20–30% of your net income (profit after expenses) for taxes. Set up a separate savings account just for this.
Also:
Keep digital copies of receipts for deductible expenses
Track mileage, home office use, and software subscriptions
Consider working with a bookkeeper to stay organized year-round
💡 You don’t need to know all the tax laws—you just need to keep clean records. We can help with that.
📁 4. Learn the Chart of Accounts (Your Business’s Filing System)
Your chart of accounts is a list of categories used to track all your income and expenses. It’s like the foundation of your financial reporting.
Here’s what it includes:
Revenue accounts (e.g., product sales, services)
Expense accounts (e.g., marketing, supplies, subscriptions)
Assets and liabilities (e.g., bank accounts, credit cards, loans)
Why it matters:
This structure helps you stay organized and prepare for taxes, loans, or even hiring in the future.
💡 We help new business owners customize their chart of accounts so it actually reflects how your business runs, not just a default template.
📈 5. Understand the Three Key Financial Reports
Every month, you should look at three simple reports:
Profit & Loss (Income Statement) – shows income, expenses, and profit
Balance Sheet – shows your financial position (assets vs liabilities)
Cash Flow Statement – shows how money moves in and out
These reports help you:
Make better decisions (like when to invest or cut costs)
Spot trends or issues before they become problems
Stay tax- and audit-ready
💡 At Breakspears Bookkeeping Services, we deliver these reports monthly and explain what they actually mean for your business.
🧠 Final Thoughts: You Don’t Have to Be a Finance Expert—But You Do Need a Foundation
Starting your own business is a bold move. But it’s one that only works if you have your financial foundation in place.
Understanding these five financial basics for new business owners will help you:
Make confident decisions
Avoid tax-time stress
Set your business up for sustainable growth
And the best part? You don’t have to do it alone.
✨ Need Help Getting Your Finances Set Up?
At Breakspears Bookkeeping Services, LLC, we specialize in helping new entrepreneurs and small business owners build financial systems that are simple, affordable, and stress-free.
👉 Explore our remote bookkeeping packages
👉 Book a free intro call and let’s get your business finances in shape from day one.
