By Andre Shammas
Starting your own business is exciting—and a little overwhelming. Whether you’re launching a small online shop, opening a food truck, or freelancing on the side, being your own boss brings freedom, flexibility, and a lot of new responsibilities. One area that many first-time business owners overlook (or dread) is the financial side: bookkeeping and taxes.
As a tax preparer who’s worked with many small business owners here in El Cajon and beyond, I’ve seen what happens when good people try to figure it out on the fly. Spoiler: it usually leads to confusion, missed deductions, and stress during tax season.
But here’s the good news: you don’t need to be an accountant to keep your books in order. With a little structure and a few habits, you can stay on top of your finances—and make tax time a whole lot easier.
Let’s break down what every new business owner needs to know.
Separate Business and Personal Finances
The very first thing I tell clients who are starting a business is this: open a separate business bank account. Even if you’re a sole proprietor with no employees, keeping your business and personal finances separate is essential.
Why? Because when everything is mixed together:
- It’s harder to track income and expenses.
- You may miss deductible items.
- You could trigger red flags with the IRS.
Set up a business checking account and, if needed, a separate business credit card. Run all income and business expenses through those accounts. It keeps things clean and makes record-keeping much simpler.
Track Every Dollar (Yes, Every One)
Bookkeeping is just a fancy word for keeping track of your money—what’s coming in and what’s going out. You don’t need complicated software to start. A simple spreadsheet works fine, though tools like QuickBooks, Wave, or FreshBooks can save time as you grow.
Your records should include:
- Income: Every sale, client payment, or gig check.
- Expenses: Anything you spend for your business, like supplies, equipment, travel, or advertising.
- Receipts: Keep digital or physical copies. Apps like Expensify or even a folder in Google Drive work well.
Being consistent is key. Don’t wait until the end of the year to figure it out—take 15 minutes each week to update your records. You’ll thank yourself later.
Understand What You Can Deduct
One of the biggest perks of being self-employed is the ability to deduct business expenses—but only if you keep good records.
Common deductible expenses include:
- Office supplies and software
- Internet and phone bills (if used for business)
- Marketing and advertising
- Business meals and travel
- Mileage (track it with an app like MileIQ)
- Home office expenses (if you meet IRS criteria)
Every dollar you deduct reduces your taxable income, which can save you a lot of money. Just make sure each deduction is ordinary and necessary for your type of business.
Don’t Forget About Self-Employment Tax
Many first-time business owners are surprised by how much they owe come tax time. That’s because when you’re self-employed, you’re responsible for both the employer and employee side of Social Security and Medicare taxes—this is called self-employment tax, and it’s around 15.3%.
In addition to your income tax, this can add up quickly. That’s why I recommend setting aside 25–30% of your income into a separate savings account for taxes. That way, when tax season rolls around, you’re ready.
Know When to Pay Estimated Taxes
If you expect to owe more than $1,000 in taxes for the year, the IRS expects you to pay estimated taxes quarterly. These are due in April, June, September, and January.
Missing these payments can lead to penalties, so it’s important to plan ahead. I recommend working with a tax professional early in the year to estimate your taxes and set a payment schedule.
Even if you’re just starting out, it’s better to be proactive than to get hit with a surprise bill later.
Choose the Right Business Structure
Your business structure—sole proprietorship, LLC, S-corp, etc.—affects how you pay taxes, how much liability protection you have, and how you can grow.
If you’re just starting, you’re probably operating as a sole proprietor by default. That’s fine for many businesses, but as you grow, it may make sense to register an LLC or elect S-corp status for tax savings.
This is something I help clients evaluate once they start making consistent income. There’s no one-size-fits-all answer, but getting the structure right can save you money and give you peace of mind.
Stay Ahead of Deadlines
Missing tax deadlines can lead to unnecessary stress and penalties. Here are a few important dates to remember:
- January 31: Send 1099s to contractors (if you paid anyone $600+)
- April 15: File your personal tax return and pay Q1 estimated taxes
- June 15, Sept 15, Jan 15: Remaining estimated tax deadlines
Set reminders, keep a tax folder, and talk to a professional if you’re unsure. A little planning goes a long way.
Ask for Help When You Need It
Running a business means wearing many hats—but you don’t have to do everything alone. If bookkeeping and taxes feel overwhelming, get support early on.
An accountant can help you:
- Set up your books properly
- Understand what you can deduct
- File your taxes accurately and on time
- Plan for growth and future tax savings
As someone who’s worked with small businesses for years, I can tell you: the earlier you build good habits, the easier everything becomes. Don’t wait until April to get organized—start now, and stay ahead.
Final Thoughts: Keep It Simple, Keep It Consistent
Bookkeeping and taxes don’t have to be scary. With a little effort and the right tools, you can manage your business finances with confidence. It’s not about being perfect—it’s about being consistent.
So if you’re a new business owner, welcome to the journey. Stay organized, keep good records, and don’t be afraid to ask for help. The financial side might not be the most glamorous part of entrepreneurship—but it’s what keeps everything running smoothly.
And remember: when you take care of your books, your books take care of you.