The Side-Hustle Dad

Ep07
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There is One Absolute in Business
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​[00:00:00]

Bryan Steele: Welcome back to another episode of The Side Hustle. Dad, I'm excited to have you with me today. Now, I'm not normally one for absolutes. There's always gray areas with different things. Some ideas I might give you may not always fit, but today is different. Today is literally the one thing every single business needs, whether it's a small, tiny side hustle or an enterprise, right?

Every single business should have this. And if you don't, then you're putting yourself in a really, really tough situation. So I want to solve that problem for you today, help you out with that. [00:01:00] It may seem obvious, and maybe you've already got this, in which case, it's a short episode for you, but I want you to imagine.

Tax Season Receipt Chaos
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Bryan Steele: Scrolling through receipts. I mean, we're coming up on tax season, right? It's just a April 15th is mere weeks away. At the point you're listening to this, and can you imagine. Flipping through receipts, scrolling through your bank statements, trying to figure out if that Amazon charge that was $45.

Was that one that was something you bought for your daughter or was that like a laptop stand for your business, like something that you were using to help run your business? And is it a deductible business expense? You never want to be in that situation. You never want to be trying to understand what's going on.

One Must Have Separate Account
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Bryan Steele: The thing I always advocate when you're dealing with finances and expenses is keep it as simple as possible, which is your business needs. Its own bank account, its own checking account, right? One that is [00:02:00] completely separate from all personal expenses. The only thing coming into that account is what your clients are paying you.

The only thing going out. Is the money used for expenses, software, tools, equipment, materials, all of those things. And then paying yourself, right? Just a transfer. It's the one thing you really, really need is another bank account.

Mindset Shift to Owner
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Bryan Steele: I think the real big thing to get at here is that you have to make a shift in your mind.

I'm treating this professionally, I'm taking it seriously, and it's going to operate seriously. It's going to be clear what's going on in your business if you make it separate. It's very obvious, like, are are we bringing in more money than we're spending? It becomes a lot less ambiguous because you've got it all isolated, so you know you are, you're taking care of things Here, the business is its own entity.

It makes it clear and obvious when it's [00:03:00] a separate item. If you treat it like a hobby, if you say, I'm not taking this serious because I'm not gonna have a separate account, it's going to cost you like a hobby. Everything's gonna be messy. But the moment you give. Your business, its own bank account. Even if it's only $50, you aren't just the guy with a hobby anymore.

You are a business owner and that's gonna create a little shift in your mind, and that can be pretty powerful.

Easy Setup No LLC Needed
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Bryan Steele: Now, you might be going, oh, I don't want to go through the steps of getting another account.

Like how am I, what am I gonna have to go through to get this set up? It is not as hard as you might think. It is literally just a second account. If you don't have an EIN or any of those fancy tax things, if you're just a sole proprietor making some money on the side, all you need is another second personal checking account.

You don't need a DBA doing business as account. You don't need an LLC business account. You don't have to go [00:04:00] get complicated things set up.

You can just open a second one just for yourself and you know that that account is only gonna be handling transactions for your business. And honestly, it should not cost you anything. A personal account, in fact, is gonna pay you interest on the money that's being held by that bank. The BA bank I have.

Doesn't, doesn't give me interest, but it has all these online features and it doesn't cost me anything to have. So there should be a bank out there that makes this easy for you, and you're thinking about this because you're wanting to protect everything you've got. You're wanting to isolate and provide financial security.

Firewall for Clarity and Taxes
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Bryan Steele: And so when you start to mix expenses between the business and personal, you're inviting chaos. And uncertainty, and we don't want that. We want simplicity and clarity. It's not trying to be fancy. We're not trying to be cute. [00:05:00] We're creating a firewall. A firewall around your personal financial situation, your personal finances and your business finances.

So tax season doesn't become a nightmare. Right. Trying to figure out what receipt goes to what thing, and tracking it. When you have a separate business checking account. It's very clear. Every transaction in there is going to have some business purpose and you can look through it and say, this was for this, this was for this.

And when you're early on, you're probably not gonna have a whole lot of expenses, and it's gonna be pretty easy to track them and know where they're going.

It's not about being cute, it's not trying to look super professional. It's literally creating this barrier between personal finances, what your family's financial situation is, and the business's financial situation. There's a lot of clarity that comes with that. When you've got this separate account, like it's very simple to look at, Hey, here was the money in here, was money out?

Is this working? [00:06:00] You can't really hide anymore. Like it you could when it was all mixed together and confusing. And on the flip side, at this time of year, every year tax season, it's gonna be very easy to say, here are all the statements for the business account. This is all of it. This is everything.

And it is only business expenses. And that's what is so important to be tracking. Okay, now.

How to Open the Account
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Bryan Steele: Like I said before, this doesn't have to be complicated, so all you have to do is a couple of things. So one, if you're just gonna get a second account through your existing bank, then lots of times they have apps and you can just go open a new account through there, just apply for it and in a few minutes you'll have a new account open.

You can go online and look for some different options online for business. Checking accounts. Some of them require an LLC, but you can, you can look on the official business side or just get another personal account. Maybe you wanna get a different bank so that you have a [00:07:00] different card and there's less risk of you being confused.

That might be a, a helpful thing. Totally different bank. So you know, the debit card looks completely different so I don't accidentally use the wrong card when I'm at the grocery store. That can be helpful as well. So first things first. Really quickly, really simply, all of these banks have websites where you can go apply.

It takes just a few minutes. You enter some personal information and boom, you're set up. If you've got an LLC and an EIN, you can use that and find a business checking account, but that is critical. So go start there, get that set up.

Route Payments to One Place
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Bryan Steele: The second step is the way you are collecting payments.

So if you're gonna collect payments through PayPal. Or you're gonna collect payments through Venmo, or you're gonna collect payments through Stripe. You can go into those apps, those payment processors, and tell them every time you get a dollar, it's gonna go to this account. So everything coming in goes straight to this bank account.

There's [00:08:00] always a lag, oftentimes of a few days, depends on the bank and, and the processor. So take your payment processor, whatever it is you're using to accept money from someone else and set it up so that it goes to this bank account. You don't want to be tracking multiple places.

You don't want to have to track expenses in PayPal, and you pay some things outta PayPal and you pay some things out of your. Business checking account or your extra checking account, everything needs to go to one place. So all money in through the payment processor right here, everything you spend comes straight out of that account.

And then it simplifies everything. You know, the, there's only one place to have to go look for all of your transactions to go, this is what I spent when tax season comes this, this is what I was sending out. So really it's a few simple things.

Pay Yourself the Right Way
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Bryan Steele: And then again, never spend directly from the business account for any personal items.

Now, I absolutely [00:09:00] want you to take money out so that you can use it for all the things we talk about. If you're trying to reduce debt and those things, you just don't do it directly. So whenever you're wanting to transfer money for personal reasons, you're basically taking a paycheck. And what you'll do is you'll do a transfer from one checking account to the other.

All banks make this ACEC H transfer free. There's typically a couple one to three day delay between them, but just make an ACEC H transfer and then the actual expense gets paid from the personal account. But never be actually making those payments. Never spend directly on personal items from the business account.

First, make a transfer, and then spend the money.

Stop Overthinking Just Start
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Bryan Steele: Alright, now my encouragement to you today is simple. Stop waiting for the perfect time to get organized. Lots of people sit and you're like, I'm not ready for this. I want it to be just perfect and just the right setup and research ad nauseum until I've got it all just right.

You [00:10:00] don't need a corporate lawyer. You don't need a fancy high fee business checking account. You don't need a CPA to go do this if you are a sole proprietor. If you are starting your side hustle now, just open a second personal checking account. It should be free. It takes 10 minutes and it will save you 40 hours of headaches.

When tax season rolls around, complexity is the enemy of execution, so keep it simple and keep on building from there. That's my advice for you today. Make sure you have a separate business checking account set up. And just get rolling. I'm excited for you. Take these small steps. Every little bit is gonna be helpful.

Wrap Up and Viewer Requests
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Bryan Steele: If there's something that you would like for me to talk about on the podcast, this is what episode number seven, if there's something you've been thinking about. Oh, I, I would love. To hear more about this, leave a comment. If you're on YouTube, you should be able to put a comment directly in this video. If you are listening on Spotify, [00:11:00] Spotify lets you put in comments.

So go, go leave a comment. Say, Hey, I would love for you to talk about this. This is a, a challenge I'm facing with my side hustle. Could could you talk about that? I've got, honestly, like 30 more topic ideas to talk about. If other people are listening and say, I want to talk about this. I need help. I need advice in this area, I'm happy to hear from you and I want that feedback.

So thanks again. I look forward to seeing you next time.

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