There are so many things that need to be done in the beginning. When starting your business or opening your Etsy shop you’ve got to choose a name, think about your target market, find your niche, set up a shipping strategy, and that’s just a few of those start up to-dos. Although those are all important, my experience has taught me there’s another key thing to do immediately when you get going and it might even be considered the most crucial.
As soon as you can, open a separate bank account. It’s the number one thing I recommend when people ask questions about starting a business. A lot of the tasks in starting a business can be learned, figured out, or caught up on. Blending your finances is really hard to undo and is even frowned upon by the IRS.
Accounting is probably the least of your worries when starting your Etsy shop and definitely one of the least glamourous parts of being an entrepreneur. Business finances can be confusing (and stressful) enough, make it a little easier on yourself by opening a separate bank account from the very beginning. Luckily, getting a new bank account specifically for your business or Etsy shop is easy to do.
KEEP IT SEPARATE
It can quickly become very confusing to have your personal money mixed with your business finances. You’ll want to see how much money you’re spending and making – which can be done at a glance if you have a separate bank account. If not, you’re going to spend a lot of time combing through transactions and transferring information to get your bottom line.
Not only for personal reasons of seeing how your business is doing, but your accountant, bookkeeper, or CPA will thank you. It makes their job a lot easier come tax time and you’ll be spending less money since your financial information will be clear and all in one place.
Keeping it separate helps keep it simple.
EXPENSES
When you open your Etsy shop, you’ll be buying supplies for your products, shipping materials, and paying shop fees. Get a bank account that provides a free debit card to use for your expenses. Even better, find a credit card and earn points (or cash back) while you purchase materials.
Remember that any expenses are write offs on your annual tax return. If you have a debit or credit card dedicated to everything business related, you’ll make sure no expense goes missed.
INCOME
Set up all your streams of income (Etsy and Paypal for me) to deposit directly in your business bank account. Once again, you’ll be able to see how well your business is doing by a quick look at your bank account.
Both Etsy and Paypal make it super easy – Etsy deposits money into your account weekly, every Monday, and Paypal transfers your income with one click. You can set up your new bank account to receive their deposits.
JUST DO IT
When I started my Etsy shop, my expenses and income were basically nonexistent. However, within one month of getting started I opened a separate bank account. I wanted to keep my finances organized and legit from the beginning. I’m so glad I did it and always mention this to anyone contemplating starting any kind of biz.
Most banks have options for free bank accounts and I highly suggest taking advantage of that! Don’t wait – you can thank me later.
Ready to open your Etsy shop? Download my guide to getting started here!
Great information, very easy to follow . Great instructions
Great advice! Good information on hete thanks!
Did you open a personal banking account or a business bank account?
Hi Victoria! I just opened a separate bank account – it wasn’t a “business” account because they had a fee.
Just an FYI, you can set up Etsy to pay you daily. I don’t think they’ll do it right away but it’s pretty quick after you open. It’s under the finances section and payments settings.
Thank you for the great information!
If I am cross-listing, should I have a separate bank account for each platform. For example I’m using Etsy and Depop. Should I have a bank specifically for Etsy and another for Depop? Or just one bank account for selling?
Hi Sophie! I just have one bank account I funnel all business income into! : )
That sound like awesome advice
https://www.etsy.com/people/zappyscloset?ref=hdr_user_menu-profile#
Hey Steph! how are you?
Do I have to create a business acount on PayPal, or with the personal one its okay??
Thank you so much!
Hi Laura! I’m not sure, I think a personal one would be fine as long as it’s separate from your actual personal one (if you have one), but double check the terms and conditions!
If I open another checking account meanwhile I decide to file for a business license etc would I be able to switch it over to a business account?
Hi Denise! I can’t imagine that would be a problem, but definitely recommend checking with the bank you use to make sure.
Hi Steph, thank you so much for this information! If I were to create an LLC for my company, do you know if I would have to open a business checking account or could I just open another regular checking account that is separate from my personal. I want to stick with my bank (Chase) but the business checking account requires a $2,000 minimum balance. I was wondering if I could just create a separate regular checking account instead of a business one? Thanks!