Q: I will be launching a solo law practice later this year. I know that I won’t have extra funds for a while to hire an accountant. What can I do to get into good financial practices until then?
A: Congratulations! I’m excited to hear about your upcoming plans, and love the fact you’ve asked your question here rather than depending exclusively on The Academy of Google!
Starting a business is hard work even before you officially launch. The more you can prepare now, the better equipped you’ll be to handle the unexpected challenges that inevitably occur in business.
1. Get your personal finances in order now.
When you’re a solopreneur, there won’t be much separation between your work and business finances for quite a while. Be sure you know where your money is going and how much you have to invest in your business.
2. Mix and mingling can be good--but not with your business and personal accounts.
Even more importantly, you need to ensure that you don’t combine your personal and business accounts. The most common money mistake I encounter with new business owners is what is called “co-mingling of funds.” This means using one bank account for both your personal and business needs. This also involves using business funds without providing supporting documentation that expenses are business-related.
Create a separate account for your business and use it for the expenses related to your firm. That’s one habit you should put into practice now. Trust me--your future accountant will thank you.
3. Have a plan to meet your expenses.
Plan ahead now. You won’t be making money for a while, so know how you’ll cover expenses like your rent/mortgage and healthcare. Set aside as much as you can, ideally 3 - 6 months of your current salary, to ensure that you have a way to cover your expenses as you establish and grow your business.
4. Get free financial advice.
There are so many great free--yes, free-- resources for small businesses to help set you up for success. Explore and use them! One I especially like is SCORE, which provides a wealth of online and in-person resources, particularly regarding finance. For instance, they have some templates that you can use to help you set up your expense tracking systems.
They also offer one-on-one mentoring services by experts in a range of fields. Support is something you’ll want to have wherever you can find it in your journey as an entrepreneur, and this an excellent way to get some focused assistance.
Starting a business allows you to see how much more you’re capable of beyond your profession. Being the boss and ultimate decision-maker is a dream for many. Best of luck to you as you embark on this journey, and please keep us posted on how it goes!
Photo by Melinda Gimpel on Unsplash