Wow, has it been that long?
I just looked at the date of my last blog message and realized that it’s been months since I’ve posted. I guess one of the reasons is I’ve been soooo busy teaching and training that I simply haven’t gotten around to it… so first off, my apologies.
So anyway let’s get cracking with some important info…
I walked into the bank the other day to make a deposit. Now if the thought of walking into the bank and waiting 15 minutes to get served gives you more pain than the thought of eating your own flesh, I completely understand. I loathe waiting in line… in fact I despise it!
But thankfully that’s now a distant memory because years ago I set up a business account. That means I get to bypass the 426 people standing in the regular line and proceed right to the front of the Merchant Line. Man that’s cool. I like being treated like a VIP. =)
If you haven’t set up separate bank account for your business, go ahead and do that as there are numerous benefits to you and your family (more on that in a minute). For me I needed first to register as a business with the local county. Now depending on which part of the world you’re in, there are different ways to register your business – ask a friend who owns a business in your area and they’ll let you know go about it…
Hint: Whoever you want to include on the business account, usually their name also must appear on the business license. Without it, only you will be able to administer your business account.
For example, my wife and I run our business together so I needed her name on the business license in order for her to be on the business account. Why would I do that? Because I want her to be able to sign checks, and approve anything we need done. Realize as your school grows you can’t do everything yourself!
In the US of course, there are so many ways to set up your business. Do you want to set up as a sole proprietor, incorporate, LLC, etc. Make sure you understand what model suits your school and the benefits of the different structures. Speak to your tax advisor and a lawyer to figure out what is best for you. Trust me when I say it will be worth it in the long run!
I can’t say how to do it in other parts of the world because I haven’t done it except for in Australia, where the process is similar. Register your business name at the department of business affairs in your capital city. You don’t have to set up as a company, if you don’t want. You can simply be YOU “trading as” ABC Karate. You’ll also have the option to register for GST… and again speak to your tax advisor to understand if you should do this or not.
Once you have your business registration and license take those into the bank and open an account in the name of your business. Be sure that your name and anyone else on the license that you want on the account is recorded. Now it might cost you $100 or so by the time you’re done and I know you’re probably thinking, “I don’t want to spend that!”… and I know what you mean – I used to think that way too.
Then when I learned about the benefits I went ahead and opened the business account.
Here are some of the advantages:
- You get to go in the MERCHANT TELLER LINE – faster service with tellers who know what they’re doing… =)
- You can then easily TRACK HOW MUCH MONEY you’re taking in exclusively from your school. Don’t try to deposit it to your regular personal account. It’ll give you nightmares trying to figure out from which source your money came from…
- You can FIGURE OUT YOUR OPERATING EXPENSES easily so you can take out the tax you’re going to need to pay (it’s a good idea to open another account and deposit tax money into that account so you don’t get caught out) and let the rest filter through to your personal accounts.
- You can often LINK YOUR PERSONAL AND BUSINESS ACCOUNTS so when you view them online it’s easy to transfer money between them at the click of a mouse. Again, open another account for tax so you don’t get caught. Deposit an amount into your tax account every time you collect in your business account BEFORE you draw it into your PERSONAL account.
- It gives you more CREDIBILITY with your students. When they ask you “Who should I make the check out to?” you can tell them the name of your school. As your school grows and becomes bigger than just you, you’ll definitely be glad you took this step.
Ask yourself this: If you walked into a prospective karate school and spoke with someone who welcomed you to “ABC Karate” and you paid them with a check made out to that name. Then they awkwardly smile and tell you they can’t accept checks made to the name of the school, but instead must be made out to “John Citizen” what would you think?
Of course these are just some of the benefits of setting up your school the right way to begin with, even if you don’t think you’ll ever “do it full time”.
For our readers in other parts of the world, I’d be interested in knowing how you go about setting up in your country. Post your thoughts below!
P.S. Next time I’ll tell you something else that happened at the bank that made me laugh so hard…