Starting A Business, Incorporating, & Separating Your Personal Finances From Your Business Finances | Rob Cubbon | Skillshare

Starting A Business, Incorporating, & Separating Your Personal Finances From Your Business Finances

Rob Cubbon, An entrepreneur who wants to help you

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3 Lessons (14m)
    • 1. Introduction to the Practicalities of Starting a Business

      1:12
    • 2. Think of Yourself as a Business

      7:15
    • 3. The Flexibility of Entrepreneurship

      5:38

About This Class

How to set up a separate legal and financial entity and pay the correct tax and not too much. This may sound scary, but don’t worry. I will make everything clear for you. 

This is a mindset shift: You have a business. You're not like everyone else who works for a company and gets a paycheck. You are an entrepreneur

You need to learn about the following:

  • Incorporating (setting up a business)
  • Getting a business bank account
  • Keeping a surplus of at least 3 to 6 months running costs in the company’s bank account.
  • Getting an accountant
  • What to give the accountant

As an entrepreneur, it’s important to set aside at least 30% of your income to pay the tax bill when it comes.

I’ve spoken to many inspiring entrepreneurs from every possible social, national, and domestic background who’ve all managed to make this leap and maintained their finances.

The entrepreneurial advice that no one wants to talk about... but we keep it simple for you. You can do it!

Transcripts

1. Introduction to the Practicalities of Starting a Business: I'm gonna give you some really important advice about how to start up a company. You need a separate legal and financial identity, and you need to separate your personal finances from your business finances as soon as possible. And in the next set of videos, I'm gonna be showing you how to do that. Now, tax and legal issues will be different, depending on what country you're in, and they will change from year to year. That's why I tell you in these videos the importance of getting an accountant get an accountant on. I will be telling you how to submit the right information to that accounts. So you'll be paying the correct tax to the correct tax authority on not too much. This is really important stuff. There's a great advice in there, and it's stuff that you have to do. It's not that difficult, but you just have to do it. So I would urge you to watch the next sex of videos. Please tell me what you think. My name of all cabin I'll see in the next video, huh? 2. Think of Yourself as a Business: this is Rob cover. Now, I want you to think of yourself as a business. This is an important mindset shift. You're no a freelancer exchanging hours for dollars. You're a business. Or you should set up an entity that is a business that is a separate legal and accounting identity. So I'm from the UK So I set up a limited company and lt d If you're from the US, you should set up an L. L C, a limited liability company. And if you're from somewhere else in the world, it might be called something else. But it will be fairly easy, fairly inexpensive. It maybe turn scary, boring or obvious. But you must do this at some stage. You don't have to do it straight away in the U. K. There's a way you could be a sole trader in the U. S. You could be a sole proprietor, but I wouldn't do that for too long. I would create the company as soon as you can, And for me it was easy. A few £100 or a few $100 in the U. S. And then it was a great mindset shift. I was working as a freelancer at the time, but my freelance employment revenues could go into the company, which was great and even better. Anything that I bought that was for the company. Stock images, formed software, phones, computers or getting other freelancers to do work for me that came out off the business that came out of the business bank account mindset shift. I had a business. I was not like everyone else who works for a company and gets a paycheck on. The next step is to get a business bank account very important straight. After incorporating very easy, I had to pay $50 I put that $50 straight into the business bank accounts of the business bank accounts. Balance was $50. I don't know why I had to do that, but that's what I remember doing in your country. It will be something else, but it will be relatively cheap. And then once you have that company account, you should payal the business expenses out of it and pay all the business revenues into it . How did you get your hands on the money? Well, that's where the next stage comes in. You should get yourself an accountant. So in my case, my accountant tells me to pay myself a very small salary. It's something like $700 a month, but then pay myself dividends of a few $1000 when I need it. And that's what works for me with my company and the country I have created the company in . But it might be different in yours. You need your accountant to tell you what to do. All you have to make sure is the payments go in and out of the correct accounts. And don't worry if you get that wrong, because you just tell the accountant that you paid a business expense out of a personal account, and he or she will make allowances for that in the accounts. And it's the same with PayPal or a credit card. Get a papal business account, and if you want, get a credit card for your business but pay off the credit card every month. I do it with a standing order, so don't get into debt with the credit card company whatever you do. But it does help to have a business credit card to keep the finances separate again, so If you have to pay something with a credit card, you can do so with your business credit card. If is a business expense, all I have to do is download the business bank account incomings and outgoings in the next cell spreadsheet, download the business PayPal account incomings and outgoings in a spreadsheet and download the business credit card incomings and outgoings in another spreadsheet and give them all to the accountant. And he does the rest. I may have to mark up some of these spreadsheets to itemize the incomings and outgoings, and for the income that I get, that's invoiced. My accountant likes to see the date that the invoice was raised on the date that the invoice was paid, and I do this in a Google spreadsheet. So when I create the invoice, I put it in the spreadsheet on when the Invoices paid. I'll note that down in the spreadsheets as well. So at the end of the year, I have very little to do. Onda, the accountant, will submit the accounts to the correct authorities. My accountant charges may $1000 a year for this very important point. Here is it's different from receiving a paycheck every month. You've got to get out of that mindset of receiving a paycheck every month and spending that paycheck every month. You need to have at least 3 to 6 months worth of money in your account, either in your business account or your personal account to prepare you for a few months of making no money. If that will ever happen. Hopefully it never will. I have interviewed several people during the course of making these videos. One of them, Mary Shore, was very helpful on this, had a business for a long time, and she said something very clever. I thought every dollar you earn is really only 70 cents. It's obvious thing to say, but it just really makes this point very clear. You have to keep 30% of your income in an account, ready for the tax bill when it comes and it will come. So it's essential that you separate your personal and business affairs as soon as you can. If you haven't done it, don't worry, because your accountant will sort it out. But the sooner you do this, the better. It will make life easier for your accountant so he won't charge you so much. And it will separate you from being a Juan Trippe endure or a dreamer into an entrepreneur . You have a business. It's a separate legal and financial entity, and it just gives you this mindset shift that I think is so important. This is all you have to do. You have to set up a company, get a business bank account and guess an accountant. These simple and inexpensive acts change everything on a deep level for your life, your freedom and even your personal development. I'm not exaggerating here, but remember, business and tax laws vary from country to country and from year to year. So please consult a professional accountant before making any financial decisions. My name's Rob Coven I'll see in the next video. 3. The Flexibility of Entrepreneurship: Hello, This is Rob Coven. Now we're gonna talk about the beauty and freedom of entrepreneurship. No one can tell you, though, when you can free yourself. When you start. When you leave your job, what you do that is up to you. However, it's best to research by reading books, watching videos like these, meeting other people and talking to them and see what they've done, how they did it. But it's important to ask yourself, what's the worst thing that can happen? Let's have a look at some of the people I interviewed to make these videos. Sri Ranga Ramos Sheshan is a young father born to a poor family in Bangalore, in India. He worked very hard at school, got a good university education on do a good job with Hewlett Packard. However, he didn't enjoy this good job. So he left the job secure job when his wife was pregnant with his first child and left to start a school up in Bangalore with six months savings in his back pocket. So he had a six month runway and the school is successful. He's still an entrepreneur also, I spoke to Johnson a Ramachandran again from India, this time from a different city, Chennai. Andi again. She had six months in her bank account before she made the jump. She is a Kindle author, a publisher She does outsourcing and she has many business interests and she is still an entrepreneur as well today. But how much did you have saved? We can't tell you. I mean, I can't say that six months is the correct amount of money. It could be a year. It's entirely up to you. But what's the worst thing that can happen? You can go back to the life that you had. So Mary sure did this. She is a UX designer from Connecticut in the US On day, she had her own business. She was working on it full time for a while, but in 2011 she decided she wasn't making enough money from it. The clients had dried up a little bit after the 2008 financial crisis, so she went back to work. She impressed everyone with the skills she picked up from the years of entrepreneurship on , then quit again a year later with dozens more great business contacts in her back pocket. But Mary has interesting insights in a variety of things in entrepreneurship in the US, she says, You have to treat yourself the way on employees would be treated or a valued employee would be treated. You have to think about health insurance in the U. S. She gets health insurance through her husband, who has a full time job. However, that isn't expensive as well. So in the future she may get health insurance through her company. But as much as you have to plan for taxes, you have to plan for retirement, too. In the U. S is a corporate person. You get a 401 k But Mary has an SCP, a simplified employee pension into which she invests 20% of her profits. But there's a lot of difference around the world, the people in UK and Canada, maybe less concerned with health insurance, the Americans will be. I'm making this video now from Thailand. I know plenty of Americans here, of course, on the of course, they don't have health insurance, but if they have anything wrong with them, they will just go into the nearest hospital in Thailand and get health care considerably cheaper then it would be in the U. S. But the tax situation in every country is different. Health insurance, health costs, retirement costs, their old different in every country, and they're changing all the time. So I would urge you to seek professional advice for all these issues. But you can mitigate your risks, as we've seen with insurance, pensions and savings. But the fact is, the security of corporate employment is not as it once waas. As an employee, you could be sacked, made redundant or forced to retire at any moment. But as an entrepreneur, of course, you get the ups and downs, but you can retire or semi retire when you want. And with decades of business experience under your belt, you'll probably be financially secure by the time you decide to stop working. But the scary facts for the salaried classes are all too evident, especially in Western Europe and America, where there will be three retirees for every one person working in 20 years time. The current fiscal arrangements are not fit for the people to be secure in retirement or ill health in Western Europe and North America, so it's better that we look after ourselves and our families as best we can. So it seems that entrepreneurship, far from being a risky option, may be the safest solution. My name's Rob Carbon are seeing the next video, huh?