Starting an online business, like running a blog or selling things online, is very exciting. You get to be your own boss and follow your passions! But let’s be honest: while you might be great at writing or selling, many people who run businesses online struggle with one key thing—managing the money. Handling money for an online business is quite different from a normal job.
Don’t let confusing forms or tax worries slow you down! We want to assure you that by following a few simple steps, you can take charge of your money and build a stable online company. Let’s look at the best ways to do this.
Table of Contents
1.) Get Separate Bank Accounts Immediately:
The most important step you can take is to keep your business money and personal money totally separate. When you first start, it might seem easy to use your personal bank account for everything. But mixing the money creates a big mess, especially when it’s time to pay taxes or when you try to figure out how much money your business is actually making.
Open a separate bank account just for your business. Use this account for all the money you earn, and for all the things you buy for the business (website costs, software, etc.). This clear separation is required if your business grows, and it makes it very easy for tax people to check your numbers.
2.) Learn the Simple Way to Track Money:
Bookkeeping sounds hard, but for most online entrepreneurs, it’s not scary. It simply means writing down every single dollar that comes into your business and every dollar that leaves. This is more than a chore; it’s a smart tool. Good tracking lets you see exactly where your money goes and which products or services are making the most profit.
Use a software made for small businesses, like FreshBooks. These tools link up with your business bank account and payment apps (like PayPal) and automatically pull in your transactions. Your main job is just to label each item—is it a payment from a client, or money spent on a new website tool? By spending just 30 minutes each week on this, you keep your records up-to-date.
3.) Keep Track of Everything You Spend for Business:
Since you run your own business, many things you pay for can be counted as a business expense. This is great because it lowers the amount of money you have to pay taxes on. But if you don’t write it down, you can’t claim it! This is where many new entrepreneurs miss out on savings—they forget to keep track of their spending.
A business expense is anything that is needed to run your business. This includes:
- Fees for your website and domain name.
- Monthly costs for software (like email marketing).
- Online classes or conferences you attend for work.
- Things you buy for work (new camera, computer).
- Payments to people you hire (writers, assistants).
The key is to save a digital copy of every receipt. Most tracking software lets you take a photo of a receipt, save it, and then throw the paper away. Every tool, every fee, and every business meeting should be tracked. Claiming all the right deductions is one of the smartest ways to keep more money in your pocket.
4.) Put Money Aside for Taxes Right Away:
This is often the biggest surprise for new online business owners: no one takes taxes out of your pay anymore! Since you are self-employed, you are responsible for paying your own income taxes and self-employment taxes (Social Security and Medicare) directly to the government. If you earn a decent amount, you usually have to pay these taxes four times a year. If you don’t pay on time, you might have to pay extra fees.
To avoid a giant bill later, we strongly advise you to automatically put aside a percentage of every payment you get. While the exact amount changes based on how much you earn, a safe starting point is to save about 25% to 30% of your profits. This way, you avoid panic when tax season comes.
5.) Set the Right Price for Your Work:
Many online business owners make the mistake of charging too little for their services or products because they fear losing customers. But charging too little doesn’t just cut your profit; it suggests your work isn’t valuable, and it makes it impossible to cover the real costs of running your business.
Your price must cover three main things:
- Creation Costs: What it costs to make the product (software, materials, etc.).
- Running Costs: Your regular monthly business bills (website hosting, office tools).
- Your Own Pay: A fair wage for your time and skills.
Once you add up these three things, you find the lowest price you can charge to survive. Then, you must add extra money (a profit margin) that allows you to grow your business and get through slow sales times.
6.) Make a Simple Plan and Guess Future Income:
Running a business without a budget is like driving without a map—you don’t know where you are going or if you have enough gas. A budget doesn’t limit you; it helps you spend money most smartly. Start simply: track your monthly fixed costs (the bills that stay the same each month) and your variable costs (like advertising, which can change).
Next, try to guess your future income. Look back at the last few months of sales and try to predict what the next three months will look like. If you know you usually sell less during a certain time of year, your spending for those months should be lower.
7.) Check Your Profits and Key Numbers:
To run a truly smart online business, you need to know which parts of your work are making you the most money. This means checking your profit margins. The profit margin is the percentage of money left over after all bills are paid. If you sell three different items, which one gives you the highest margin? Is it your expensive course or your cheap guide?
Two key numbers to check all the time are:
- Cost to Get a Customer (CAC): How much do you spend (on ads or time) to get one new person to buy from you?
- Customer Total Value (LTV): How much money does a customer spend with you over all the years they buy your products?
If your LTV is high and your CAC is low, your marketing is working well. If your cost to get a customer is higher than the money they spend, you are losing money on every new customer.
8.) Keep Your Money Safe with Insurance and Legal Setup:
Even though the internet feels open, your business faces real money risks, from lawsuits to data problems. Smart money management includes keeping the money you’ve earned safe. Choosing the right legal structure (like setting up an LLC) protects your personal assets, like your home or savings, if the business ever incurs significant debt.
Also, think about buying necessary insurance. Even if you only sell digital products, you might need business insurance to protect you if someone claims you made a mistake. If you collect customer information, insurance against internet security problems is becoming a must-have.
Conclusion: Take Charge of Your Money Story
Handling the money for your online business should not be a cause of constant worry. The most successful online entrepreneurs are those who treat their money seriously and stay organised. By following the described steps, you stop just reacting to money problems and start actively writing your own successful financial story. Start with one easy change today—maybe open that business bank account—and build these smart habits one by one.
About the Author:Callum Hewitt is a freelance writer specialising in home improvement, outdoor living, and eco-friendly gardening solutions. He often explores practical topics such as plants for shade, low-maintenance landscaping, and modern family garden design. His work appears across lifestyle, parenting, and technical publications, where he focuses on clear, useful advice readers can apply instantly.
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