Small Business Finances: The Key Financial Pillars of Building a Start-Up

Pillars of Small Business Finances

Here's a note from a reader:

“…thank you for the information you provided on Entrepreneurship on Fire. I was deeply encouraged and felt led to contact you. I am a 24 year old entrepreneur, economics and finance major, former athlete. Recently I quit my IT sales job to focus on my a project I have been working on since December.

My partner and I are launching the site in 6 weeks- online sports media business. Just wanted to ask a question- What are the key financial pillars of building a start-up?

I would suggest a few things:

1. Create a partnership agreement and roles and responsibilities document. I don't have personal experience with this, as I am more prone to working alone, but this is as important as anything directly financial. The Wall Street Journal has a great piece on this topic. The key takeaway:

“Every agreement should address three crucial areas: compensation, exit clauses, and roles and responsibilities. Include who owns what percentage of the business, who is investing what, where the money is coming from, and how and when partners will be paid.”

2. Separate your business finances from your personal. This means at a minimum opening up a business checking account (a DBA account). I've found it useful to get a business credit card and Dwolla and/or PayPal account as well. It's tough to make decisions about your business when they are mixed in with your personal finances. Tax time can be unnecessarily tough when you have to split everything out.

3. Track your income and expense using Quickbooks Online or other software. You can tie this software to your checking account, credit card, and payment account. This will help you know where you stand with your business (each month, quarter, year), and it makes tax time a lot easier for you or your accountant. You'll get professional reports and invoicing as well.

4. Once you start making some cheddar you might want to form an LLC or other official entity type to further separate your business from your personal. See how I started my conference business from a legal and tax standpoint. You will also need to start making estimated tax payments…but you get a pass your first year on this.

5. You should still be saving for your retirement. At a minimum open up a Roth IRA and contribute the max each year. If you want to do more, consider a SEP IRA or Solo 401K (like me), which will help you shelter some of your business income from taxes.

I'm a bootstrapper, so I know nothing of the funding world or taking loans. My businesses are pretty simple….I make sure I make more than I spend. If you follow one financial rule, that's the one.

Alright readers, did I miss anything? What, to you, are the key financial pillars of building a start-up?

Image credit: Rachel Sarai (via Flickr)

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Last Edited: June 26, 2017 @ 4:47 pmThe content of is for general information purposes only and does not constitute professional advice. Visitors to should not act upon the content or information without first seeking appropriate professional advice. In accordance with the latest FTC guidelines, we declare that we have a financial relationship with every company mentioned on this site.
About Philip Taylor

Philip Taylor, aka "PT", is a CPA, financial writer, podcaster, FinCon Founder, husband, and father of three. He created PT Money back in 2007 to share his thoughts on money and to meet others passionate about managing their finances. All the content on this blog is original, and created or edited by PT. Read more about Philip Taylor, and be sure to connect with him on Twitter, Facebook, or Google+. Listen to the new podcast, Masters of Money!


  1. Craftyborrower says:

    My brother wanted to start a business. He kept telling me all about his product but when I asked him about his finance plans he would always say something vague about finding angel investors.

    I’m just an amateur and even I could tell him that he’s got the cart in front of the horse.