When you start your business, you’re so focused on getting new clients and making your first dollars that you don’t think much about how your business runs.  Hey, you’re just happy that you’re making money doing what you love!

The initial novelty of starting a business is undeniable.

However, before you know it, years go by.  Rather than Upleveling into the role of a business owner, you’re still stuck in “little ol’ me” thinking.  That thinking translates into actions (or inactions) that can ultimately keep you at the same income level for years.  Not fun.

Do yourself a favor and make sure you aren’t making the following “newbie” mistakes. Then, take action to Uplevel your business and yourself!

Mistake #1 – Not having a business checking account

Do you let your money just flow in and out of the same account?  Are you paying for groceries and web design from the same checking account?  At the end of the tax year, are you frantically trying to determine which expense is business and which is personal?

Yes, yes and yes?

Well, you must change this immediately.  Make it a priority TODAY.  Get a checking account for your business.

This may sound like Biz 101 to some of you, but I’ve met too many self-employed women who work in this kind of accounting chaos year after year.  It’s a guaranteed way to fail.

Mistake #2 – Not paying yourself a salary

The woman with a Lack Mindset doesn’t pay herself a salary. She just grabs what she can at the end of each month.  What she’s telling herself (and the whole world) is that she doesn’t value herself or her work.

Don’t be that woman!

Now that you’ve set up a business checking account, here’s your next step.  Choose an amount to pay yourself each month or week. Then set up a system and do it.

Money is energy. As such, it needs to know where to flow.  Once you set up an exact amount for your salary, you’ll be amazed to discover that this amount always seems to be there each month.  It’s one of the key ways to Uplevel your business when you’re a newbie!

 

Mistake #3 – Not setting up a business entity

If you’re still a sole proprietor, you’re probably paying way too many taxes!  Self-employment taxes are among the highest taxes you can pay.

Whether you choose to incorporate, you need to have both the tax benefits and the legal protection of a business entity.  An LLC is also another option.  Choose a name for your company, and research the options available to you.  On-line legal services like LegalZoom.com make this process a breeze!

AMENDMENT: After I posted this article, Marilee (who is an attorney) generously added her thoughts in a comment below – and I wanted to make sure my readers could see what she wrote:

I am an attorney, and notice three big issues with what you said. First, a member of an LLC will still pay self-employment tax on the money that they earn working for the business. Second, if they incorporate, they may not be able to take advantage of any start-up lossess. It’s a real decision to decide whether to incorporate or set up an LLC. Third, why would you recommend that people need to spend hundreds or thousands on an accountant, but say that Legalzoom.com is the way to go for legal advice. If you are not the only one in the business, having a good Operating Agreement or By-Laws could literally save your entire business. Please don’t discredit the value of good legal advice. If it hasn’t served you well so far, then you haven’t found the right lawyer.

Mistake #4 – Doing your own taxes

I recently overheard two self-employed people talking about how they saved “hundreds of dollars” by doing their own taxes.  Ugh!  This is a surefire way to stay stuck, in chaos – and most likely have to endure the painful process of an audit.  (Plus, are you even any good at that stuff? I didn’t think so!)

Entrepreneur, take thyself seriously.  Get a great accountant, and happily pay her the hundreds (or thousands as you get more successful!) to ensure that your taxes are done professionally.  You’ll sleep better, and you have much less of a chance of being audited.

Mistake #5 – Not setting boundaries with well-meaning friends and family

If your friends or family do not take your business seriously, it’s an issue of communication.

People who have never had their own business simply don’t understand what you do!  They often won’t take your time or space seriously.  They might call during the day, drop in when you’re on a call, or accuse you of not being a good friend when you can’t just pick up the phone.

All of this can be prevented with some communication on your part.

But first, you must be clear about your boundaries.  What are your hours?  Who do you work with? Do you do pro-bono work for friends? (I strongly suggest that you don’t!)  Does family get discounts?  Do you hire family or friends?  What will you/won’t you tolerate?

Take some time to get clear about what most needs to be communicated to the people in your life. And then, honor yourself and your business enough to share these boundaries in a clear, proactive manner.   Then, it’s up to you to enforce your boundaries!

15 COMMENTS ADD A COMMENT
  • ir35 tax

    I have only been employed at the company 2 months and completely love my job, I am paid for 27 hours a week but end up doing about 35 which I dont actually mind when needed, and I put myself and do above what is expected/requiredMy immediate manager & boss is great the problem is an operational manager who shares the same area as myself. He is highly strung and just snaps at me without warning.

    Today his abuse escalated and he started shouting me down calling me fat and f***ing useless because he blamed me being the “newbie” for his monumental mistake. He was fine 10 mins later as if it never occured! I have asked him not to speak to me like that and both my manager/boss have said they have spoken to him about it. I am older so not a young thing without a gob on me! What I need to know is have I got any rights legally as the abuse is escalating and despite what has been mentioned he is “stressed so just forget it, he doesnt mean it” doesnt really wash with me. Thanks for your help

  • Laurel

    Hi Christine —
    As an artist / business owner who is just beginning to figure some things out (and starting to make some money as a result), I can certainly use this advice. My business is set up as an LLC, and when I was first considering starting a business, I interviewed friends of mine who owned businesses and they ALL advised me to get an accountant, which I did. So far I am not paying much at all in taxes because I am just starting to earn enough money to cover my art supplies and raw materials (which is a big deal for me, so I am happy). Having an accountant has been one of my best decisions yet, and it really does free up my head space for concentrating on my genius work as you call it.

    I am in that place where I take 3 steps forward and 1 step back and a bit of time now and then to wig out a bit that I am even DOING this(!!!) but it is all a good thing. I have certainly experienced what you have talked about — how owning a business will bring up all our mucky stuff, and frankly, even though it scares me (not as much as it used to) I am glad it does bring up all the inner junk because, as I face these things, I am truly becoming the person I always wanted to be.

    I am enrolled in Gold and I am excited and nervous to begin this concentrated and very focused work to Uplevel in a big way. I do need to build my income, but that process is starting to roll forward. I thank you for everything you have shared because your own true experience and discoveries have helped me so much.

    I am also starting to encounter the most wonderful, dedicated, and enthusiastic people in and out of your programs and that is a huge gift.

    Oh, also, in my ongoing effort to clear my surroundings of what I do not love and what does not serve my purpose, I hired my sweet cousin to help me pack up a bunch of stuff and take it to Goodwill. Even though funds are still on their way to becoming more comfortable, I must say spending the money to hire her transportation costs and time costs were more than worth it. And she is so game to help and we get a lot done together. This really makes a difference. I would advise anyone who is blocked by some task they struggle with to hire some help to get it done. It pays off in practical and spiritual and successful ways!

    Bless you and your readers and clients,

    Laurel

  • Monica Gibson

    I also am a lawyer and wanted to comment on #3 — the laws on business entities vary from state to state, so it really IS important to consult with a lawyer licensed in your state. Advice that might be good for a North Carolina business might not be appropriate for a business in Virginia. Another reason to find someone who can provide advice specific to your situation.

    Thanks for your inspiration!
    Monica

  • Janelle

    Thanks Christine! Done! I spent a good portion of this week working with my accountant and a terrific new bookkeeping and CFO consultant – Monique Lusse at http://www.equitybydesign.com to get my 2011 books caught up and reporting done. I will not let my systems lag again!

    I can’t tell you how much peace it gives me to have support in making my financial and accounting systems work for me. When I started out six months ago, I sought legal advice from a local attorney who specializes in setting up business entities and he referred me to my accountant, who clearly explained the choices to me, and then set up my entity after I made my choice. When you get great help, this stuff can actually be easy (and not nearly as expensive as I imagined)! We don’t have to do everything ourselves. Nor do I even want to!

  • Andrea

    Hello! I am reading this and I love the tipp with the bank account, but I am not shure if I got it right ( English is not my mother tongue)- so I open up a business account and I will pay a amount each month. But what about the bills to pay. Do I pay for exemple the petrol for my car (business way from A to B) with the business money and when I go shopping food or lets say little household things I use my other account?
    Thank you Christine for clearing my head up:)
    Andrea

  • Marilee

    Christine,

    I am a fan of your work, and enjoy your articles. However, you really missed the mark on #3. I am an attorney, and notice three big issues with what you said. First, a member of an LLC will still pay self-employment tax on the money that they earn working for the business. Second, if they incorporate, they may not be able to take advantage of any start-up lossess. It’s a real decision to decide whether to incorporate or set up an LLC. Third, why would you recommend that people need to spend hundreds or thousands on an accountant, but say that Legalzoom.com is the way to go for legal advice. If you are not the only one in the business, having a good Operating Agreement or By-Laws could literally save your entire business. Please don’t discredit the value of good legal advice. If it hasn’t served you well so far, then you haven’t found the right lawyer.

    Marilee

    • Christine Kane

      Awesome advice Mariliee! Thanks for your additional thoughts – i will post them in an amended version above. I did indeed have a very hard time incorporating with the attorney I was using at the time. And LegalZoom was indeed helpful to me when I created an LLC. The challenge of writing an article like this is that with trying to “generalize” items – it’s easy to not see that the benefits of these choices have different merit. Thanks for pointing this out.

      • Marilee

        Thank you, Christine. I am sorry that you had a bad experience with your lawyer. There are plenty of us, though. I work for a firm in CT that focuses on privately held businesses and their owners. I would highly recommend that you find a similar firm in NC. To use your words:
        “Get a great lawyer, and happily pay her the hundreds (or thousands as you get more successful!) to ensure that your documents are done professionally. You’ll sleep better, and you have much less of a chance of being sued.”

        Thank you again for your inspiration and advice.

  • Stacy

    I’m curious about #3. I am a partner in a LLC company, and I most definitely pay self-employment taxes on my K1 income. So I’m curious how incorporation can reduce one’s tax burden, as the tip seems to suggest. Is our company’s accounting firm missing something?

    • Christine Kane

      Stacy – Since I am NOT an accountant – I legally can’t answer this. 🙂 I can tell you that I have an LLC for the property we bought for our offices – but my other companies are corporations. My accountant takes care of the details. I know that there are some differences in how LLC’s work from Inc’s — but I know that either one is better than sole proprietorship. I would do some research on it if you’re concerned!

  • Stephanie Leach

    Thank you for sharing the picture of you with your team. The amazing growth you have experienced encourages me to move forward fearlessly. I also want to thank you for sharing Paula Onysko’s success story. I too have a dual career, (not easy!) and want to reduce my corporate work and increase my health coaching work. This is going to be a great year!

    • Christine Kane

      Go Stephanie!

    • Paula

      Heh Stephanie,
      Glad you could see yourself in my words and know that it is possible for you too! I’m happy to discuss more on how I’m using what Christine is teaching us. One thing that has been so valuable is to apply her wisdom not only to my coaching business but also my consulting. As she says, (and I’m paraphrasing here) “We don’t always need to change the WHAT, sometimes we just need to tweak the HOW.”

      So true! In my consulting work (which I’ve nicely scaled back), I’ve set better boundaries, looked for opportunities to package services and quote more often on a project basis versus dollars for hours. I’m also outsourcing admin tasks where possible, which frees up my time and keeps me jazzed about the work I choose to do.

      Anything is possible when we step into our power and decide, “This is what I need to do my best work!” Wishing you sparkling success, Paula

  • Biz

    YES TO #5 – that is a huge thing that I am constantly honing – setting the appropriate boundaries. What is it about working from home that automatically make people think you have all the time in the world?!? I love it when you say “All of this can be prevented with some communication on your part” – so simple, yet so very true! Thanks CK for the reminders! Great article, and loved seeing your team!

    • Christine Kane

      Hey Biz!

      I once heard someone say something like “Removing stress always comes down to a difficult conversation.” I’m not quite getting it right – but it made lots of sense to me! (And is so true!) I’ll miss seeing your smiling face next week!

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