When you’re starting your own business it can be really easy to get hung up on all the things you think you need to have in place. But accountant and Pepperlane member Mellinda Abbott says it doesn’t have to be that hard.
She would know. Her firm, Abbott & Company, is focused on helping small businesses think through their finances and make sure they are spending their money in the right way.
“I think people get caught up in a lot of the legalities and formality of starting a business.” Mellinda says. “We coach businesses to first understand that the critical part is getting customers, then once you do that the rest is easy.”
We asked Mellinda for some more specifics on what people should and shouldn’t worry about when getting started. (The good news is setting up an LLC falls into that “shouldn't” category.) Read on for her tips on how to make your life as a new business owner so much easier.
1. Use envelopes for expense tracking
That might sound old school, but if you make your expense tracking system too elaborate, you won’t end up using it at all, Mellinda says. She recommends keeping an envelope in your car, bag, and home, and whenever you buy something related to your business, throw the receipt in there. Review every few months to see where your money is going. And be sure to know what expense are deductible so taxes are easier (we outline some starting points on there here.)
2. Open a separate bank account for your business
“It doesn’t have to be fancy,” Mellinda says. Getting a separate bank account and credit card ensures you won’t mix up your personal spending and business spending. Not knowing where your money is going makes it far too easy to spend more than you actually make.
Don’t get hung up on finding an official “business” credit card, as those can be harder to qualify for; the more important thing is that it’s distinct from your everyday spending credit card and account.
3. Opt for insurance over pricier legal work
Those of us who like to play by the rules (talking to you, mothers) think that we need to get a lawyer involved to make our business more official, Mellinda says. Luckily there’s an easier way: insurance. Mellinda says that if you don’t have an office or employees, your risk is still pretty low, and setting up an LLC or getting an expensive lawyer involved is premature. As your company grows you move into that, but getting insured is a much more efficient first step.
Not sure where to begin? “An insurance agent is your friend,” Mellinda says. “Make sure you understand what you’re getting and what you need and how much it’s going to cost.” Insurance can vary widely by industry, particularly with all the new industries and services sprouting up (home organizers, as one example), and an agent will help sort through all that.
4. Get mentors
And check in with them regularly, so they can keep you accountable, Mellinda says. They’ll help you understand why you didn’t follow through on something you committed to, and how to improve.
You can join the Pepperlane members forum or our community Facebook group to connect with other mothers who are building their businesses, too. And if you’re looking for even more inspiration and support, consider attending our first annual members’ conference this fall in Lexington.
5. Remember that a business is about making money
That may seem obvious, but our behavior doesn’t always indicate that, Mellinda says. While starting your business can be a great way to explore your passion and get some me time, it’s important to remember that it is a business after all. That means don’t spend too much time on things that won’t bring in money or won’t help you grow. “Our whole entire business system is built around the idea that businesses make money. But businesses lose sight of that. It takes a lot of work.”
If you want to focus more on developing your passion and feel like you need some extra help thinking through the business aspect, consider working with Mellinda and her team. You get in touch with her here.