How to Separate Your Personal Finances from Your Business Finances
This episode, I will talk to you about why it's so important to separate business and personal finances while you're setting up your dropship business.
As with anything, it's really good to have everything separated completely. You really want to focus on having separate accounts and separate bookkeeping for your personal life and business life. If you have even got to the point where you're doing a monthly budget with your personal life, I highly recommend doing that. Check out what's a good source on that four-hour workweek. Just look up on YouTube and actually maybe even make a budget sheet so you guys can use that for your budgeting.
It's really simple process.
You're just looking at your income and your expenses. You want to know what you're bringing in and what's going out. That will help you consolidate your bills. It will help you think about new ways you can bring more money in - give you a better perspective on your personal life. Moving towards your business, you have to understand that your business works the same way. It's super important to keep track of exactly what's coming in and what's going out in your business.
In fact, you're going to have to keep track of more than just that. You can have to keep track of your balance sheet, which basically means every month, knowing exactly where you are in your business. And then every few months, every year doing the same kind of thing. And especially for tax purposes, you're going to have to be able to tell the IRS how much money you make at the end of every year, sometimes every quarter to paint how much you make. You must keep all of these things separated. Suppose you're setting up an LLC specifically. In that case, the only way you're going to be able to keep that separation between yourself and your business as far as your finances go is to keep everything separate. That means having separate business credit cards just for business purchases, whereas personal credit cards for personal purchases and keeping track of every single purchase you make with a receipt and a reason why it was for your business.
For instance, if you start selling dining room tables and go to a home show in a city like Miami, which is where it is most likely, you can write off pretty much everything that happens in Las Vegas during that trip to your store. That is so you can keep track of your profit and know where to spend it.
You're trying to build your business that can be written off. Make sure it's all separate. Make sure you use the right credit cards for it, keep the receipts, and upload them. A great way to do this is by setting up quick books online, and I'll have tutorials for that as well. Later in this course. But the key, of course, is to make sure that you are actually using it. It does take a little bit of work and effort, but if you don't, then you're not going to have that separation.
If someone did want to sue you, they could come after your personal liability. In case you do have cash or a house or their assets, they could actually come after you. In the court of law, they could take your house or any of your assets if someone sues you. Unfortunately, that's just how it is. It's called piercing the corporate veil.
Again, I'm not a lawyer. I'm not an accountant. This is my basic understanding of how it works. If you want more information and you want more of an in-depth explanation of how this works. Consult with a lawyer. I do recommend rocketlawyer.com because they're very inexpensive. There's a great CPA firm called Benchtop Co. that is does bookkeeping and accounting, and you can sign up with them and get advice for them as well. There are also available bookkeeping services online; definitely check that out.
You must do all the necessary things for your LLC if you get your LLC and don't just do a sole proprietorship. This also includes doing all of your business paperwork on time and filing it with the state properly. And yes, you need to keep everything set. I can't stress this enough. I really hope you understand that it takes more work than just being an employee as an entrepreneur. Understand that you get all the free time and the rest of the day because of that.
Enjoy it, and do it.
Make it a part of your life.
Make new habits.
Make it part of your passions.
Step-By-Step Training for High-Ticket Drop Shipping
Here are the next steps you'll need to take to start your high-ticket dropshipping business:
Resources for Starting A High-Ticket Drop Shipping eCommerce Store
These are the resources I've created to help you start your own high-ticket dropshipping eCommerce store:
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eCommerce Paradise was created by Trevor Fenner of Seattle, Washington in 2015 to help you, the entrepreneur, to start and scale your own eCommerce business selling high-ticket products online with the drop shipping fulfillment method so you can make more profit per sale, have a sustainable and evergreen online business, get started with very little upfront investment, and live a location independent lifestyle. Trevor owns multiple 7-figure High-Ticket Drop Shipping eCommerce stores and is a digital nomad, traveling the world while working remotely with the help of his team of over 10 virtual assistants from around the world. Trevor is currently located in Bali, Indonesia. Trevor is also a passionate skateboarder, surfer, scuba diver, photographer, environmentalist, outdoorsman, fitness and tattoo enthusiast.
AFFILIATE DISCLOSURE: Some of the links on this page may be affiliate referral links. I will get a commission from the vendor when you make a purchase after clicking them at no added cost to you. As a result, many of them also provide you with a special discount just for using my link. You can go directly to their support if you have any issues with their software or product.