Hello everyone, welcome to the Balanced Business Leaders Podcast hosted by yours truly, Claire Jones, owner of Liminal Clarity. We are a business development agency that helps small business leaders scale and grow without burning out.

This is the next podcast in a series where we will be discussing the various trials and tribulations that lead me to creating my Three Pillars of Business Success, a framework that represents the foundational systems that contribute to sustainable business growth.

If you’re interested in learning more, please join us in our free Balanced Business Leaders Facebook Group at

Ready? Alright, let’s dive in.

[musical intro]

So I started this podcast as a way to tell my story, particularly when it comes to the many, many different lessons that I have learned over the years when it comes to founding, developing, running, and growing small businesses.

This particular episode is about the second step to creating effective Processes & Systems for your business – financial processes. These are important because you need to take control over your finances and implement the processes that will track all of it

Did you know that 35.6% of business owners don’t use accounting software? (source: Statistia)

Did you know that 27% don’t have a separate bank account for their business? (source: Clutch)

And that 23% say they’re worried about commingling personal and business expenses?

These statistics are exactly why setting up solid financial processes for your business is so important. If you don’t, you’re putting yourself at risk for:

  • Being short on cash
  • Facing unexpected tax bills
  • Failing to claim business tax deductions
  • Getting audited by the IRS
  • Not being able to access capital, like business loans
  • Not understanding your legal liability

I’ve seen too many small businesses struggle to understand their financial situation, let alone stay on top of it.

More often than not, these skill sets are not something within their zones of genius and, because it’s in their discomfort zone, they tend to avoid dealing with it altogether.

Money is an emotional subject, and, if math was not your favorite subject in school, it tends to get very overwhelming very quickly.

But it doesn’t have to be that way. With the right systems and structures in place, it can even be easy.

So where do we start?

First things first, get yourself a separate business banking account. I usually recommend going with a credit union bank because they typically have more accessibility, support, and perks for their members than big corporate banks.

Get both a checking and savings account. The checking is going to be for your income and expenses, and the savings is going to be for your tax money and/or any business savings. 

Some people even recommend getting multiple checking accounts – one for income and one for expenses – but that’s typically not necessary if you can stay on top of your cash flow reporting.

Second, create your initial Cash Flow Report for at least one month leading up to Opening Day and 12 months after Opening Day. Month zero should detail your starting financial position, including any start up capital or costs that lead up to Opening Day.

If you are setting these up after you’ve already launched your business, month zero should detail your current financial position – including the cash you currently have on hand, the debts you currently owe, as well as any equipment, tools, or furniture that you’ve purchased exclusively for business use.

It’s basically a 13-month spreadsheet that details the business’s financial position over time. This way, we can predict what our cash position will be in any given month. This helps us better understand and plan for busy months, slow months, quarterly expenses, yearly expenses, big purchases, wages, tax payments, etc.

You can find Cash Flow templates all over the internet, the Small Business Administration SCORE website has some great free downloadable templates. Or you can purchase them from someone else, like myself or a bookkeeper.

If you are starting your business from scratch, your numbers are going to be a bit of a guessing game. But, it will provide you with an estimated picture of what kind of financial support your business is going to need in order to survive the first year or so. This is very, very, very helpful when it comes to acquiring start up capital and funding.

Whether you are funding the business yourself or seeking capital from another source, you need to have a good idea of how much you need. This cash flow report is going to provide you with a clear picture of that.

If you’ve already been running your business for a period of time, these numbers are typically going to be found in your bills, contracts, receipts, point of sale system, and credit card or bank statements. I recommend gathering copies of them all up in one place so that you can reference them easily as you go through your Cash Flow spreadsheet.

Again, this is why keeping a separate business bank account and/or credit card is super helpful. Then you don’t have to comb through all of your personal accounts to pick out your business expenses or income.

Third, set up an accounting software to track revenue and expenses. 

This kind of software is going to help you a ton when it comes to tracking the income and expense categories on your Cash Flow Report on a recurring basis. It’s also going to help a ton when it comes to yearly tax time, many software applications will provide you with all of the reports that your accountant or bookkeeper asks for.

Wave Apps is free and great if your needs are fairly simple. FreshBooks and QuickBooks have different subscription levels. They all come preloaded with a default chart of accounts that makes getting started easy. You can customize later.

If you are a sole proprietor or single member LLC, I prefer Quickbooks Online Self Employed because it’s simple, you can access it from anywhere, and it hooks up to a phone app that can track your business mileage automatically. 

If you are registered as a corporation or multi-member LLC, then I would recommend Quickbooks Online. It offers more robust reporting and tracking when there are more variables involved.

Also, all Quickbooks products are owned by Intuit so they have a built-in integration with TurboTax.

If you use Intuit TurboTax Business to prepare and file your taxes, you can import your QuickBooks data directly into the application.

Quickbooks also provides invoicing as well as a Point of Sale system so that you can handle all of your payment processing through them if you want. This helps you avoid having to pay for a whole separate payment processing system.

These three fundamental steps will get you set up. Once these are in place, then you can decide whether the maintenance tasks are something you want to DIY or delegate to someone else. 

But do keep in mind that you’ll want to have a certified CPA, bookkeeper, and/or accountant review the systems you put in place so that you can minimize your risk of missing something sooner rather than later.

I have a recurring weekly task for updating my Quickbooks account every Friday afternoon. It’s basically 15 minutes where I sit down and go through all of that week’s transactions on Quickbooks, categorize them in their various income and expense categories, and transfer my tax money over to my business savings account.

Alright, let’s talk about taxes for a bit. Now the exact tax amount that you are going to be responsible for is going to vary industry to industry, state to state, county to county, city to city, and country to country. 

Your tax rates are also going to depend heavily on what your business’s legal structure is, whether you’re a sole proprietor, a partnership, an LLC, or a corporation. 

So always, always, always confirm the rates with a certified bookkeeper or accountant first. And never assume that a tax law is going to stay the same from one year to the next, so make sure to keep your information updated accordingly.

As additional help, you should get a copy of the IRS’s “Tax Guide for Small Business” (Publication 334), from from any IRS office, along with a list of their other free small business publications. These are all excellent and reliable references. You can find these tax publications on the IRS’s website,

The details when it comes to tax laws are complicated, convoluted, and full of “ifs, ands, and buts”. The information that I’m presenting here is the bare minimum basics that you should keep an eye on as part of your financial processes. 

I am not a certified bookkeeper or accountant, so do not take my advice as the last word. These are just the basics that I’ve learned after running small businesses for 15 years. 

The overarching rule of thumb for this is to save more than you think you’ll need. You can always give out bonuses or invest that extra money back into your business later on.

Side note: I highly recommend investing any extra money back into your business, it’ll pay off much more in the long run compared to keeping it for yourself.

Alright, so sole proprietors must file a federal income tax return if your net earnings from self-employment (your business profit) are $400 or more for that year. Net earnings means your total gross revenue minus your total expenses. It’s also known as net profit.

Partnerships, corporations, and LLCs must file a return no matter what the profit or loss is.

Generally, sole proprietors, partnerships, and LLCs must submit their federal tax return by April 15th. Corporations must submit their federal tax return by March 15th.

Remember, all of this is highly dependent on your business’s legal structure and your city, county, state, and federal laws.

And, if you are interested in learning more or getting a deeper understanding of the basics that I’m presenting today – there’s a fantastic book called Small Time Operator by Bernard Kamoroff that I highly recommend you check out.

I consider this book to be my Bible when it comes to creating and running a small business. I’ve read through it multiple times at different phases in my life and each time I learn something new and worthwhile. It is my go-to reference tool when I have questions about financials, taxes, legalities, hiring/firing, and everything in between. I highly recommend this for anyone who is considering starting their own small business, or anyone who wants to make sure their existing small business is on the up and up.

So next time, we’ll be going more in depth into the third step of Processes & Systems, the Client Journey. I hope to interweave my personal experiences with the business lessons I learned along the way so that I can paint a full picture for you guys.

And please let me know what you think! I am always open to feedback and love connecting with my audiences.

If you want to learn more, I personally invite you to join us in the Balanced Business Leaders VIP Group Program. In as little as one hour per week, you will walk away with a clear action plan to grow and scale your business sustainably.

Please visit for more information.

You can find the episode outline, video recording, transcript downloads, related links, etc. below.

And, until next time, love you all, take care, and I hope you have a good day wherever you are.

[music outro]