Dave breaks down the process of setting up a separate business account and budget for Rick.
QUESTION: Rick wants to start a business. When he collects money from customers, he’s not sure what to do with it in terms of paying taxes and things out of the account. Dave breaks it down for him.
ANSWER: Get a separate business account and keep it completely separate from your personal account. The money in that account is just for the business. Pay all taxes and expenses from that account. Whatever is left over is called profit. Your profit and loss statement will look a lot like your checkbook statement.
Do a business budget and forecast what you will make during any given month, and learn as the months go by what to expect for what you make. Set aside a fourth of your revenues for taxes and pay quarterly estimates on your taxes.