In this article
How to start your first business without mixing it into your personal money: get an EIN, open a business account, write a one-page plan, and track taxes.
Disclosure: Priceless Tay may earn a commission if you sign up or buy through links on this page.
You have the idea. Maybe your first client already paid you through the same Venmo you use to split dinner. Now the business money and the grocery money are in one account, and you have no idea what you'll owe in taxes next April.
That's an easy way for a first business to get messy, and it's fixable before it starts. This guide covers how to start your first business with the money side set up from day one: the ID number, the account, the plan, the online home base, and the tracking that keeps tax season from becoming a surprise.
Links mentioned
- Relay business banking
- Free 1 page business plan (shown in step 3 below)
The 5 steps to start your first business
1. Choose a structure and get an EIN
Before you open accounts or send invoices, decide how the business is set up. Most first businesses start as a sole proprietorship (you and the business are the same for tax purposes) or an LLC (a separate legal entity you register with your state). The SBA's guide to business structures compares the options in plain language. Rules and fees vary by state, so check your state's business filing website before you register anything.
Next, get an Employer Identification Number (EIN). It's a tax ID for your business, and you can apply for free on the IRS website. Many sole proprietors without employees aren't required to have one, but it's still useful:
- You can give clients your EIN instead of your Social Security number on forms like a W-9.
- Many banks ask for one when you open a business account.
The IRS doesn't charge for an EIN, so skip any site that asks you to pay for one.
2. Open a business bank account
Once the business has a name and an EIN, open a separate account for it so business income and personal spending stop blending together.
Why it matters:
- You can see what the business actually earns. When everything sits in one account, a good month for the business can hide a bad month for your spending, and the other way around.
- Taxes get simpler. You won't be scrolling through a year of mixed transactions trying to remember which ones were business expenses.
- It supports the structure you picked. If you form an LLC, keeping business money separate is part of keeping the business separate from you. An attorney can tell you what that means in your state.
Priceless Tay recommends Relay, a business banking platform that lets you open multiple accounts to organize your money, with built-in savings. Check Relay's current pricing and savings rates before you sign up, since fees and APYs change.
Multiple accounts are useful because you can give each one a job. A simple starting setup is one account for operating money, one for taxes, and one for what you pay yourself. Your personal side can use the same idea: the FUNDS Framework splits take-home pay into five accounts so each dollar has somewhere to go.
3. Write a one-page business plan
Your business plan doesn't need to be 50 pages. One page that answers four questions is enough to start:
- Who you're serving: describe your ideal client in one or two sentences.
- What you're offering: name the problem you solve and how.
- How you'll make money: list your revenue streams and what you'll charge.
- Why you're starting: write down the reason, so you remember it in a slow month.
Add one more line that a lot of first plans skip: how much you'll spend before the business brings in its first dollar. That number tells you how much runway you need and keeps startup costs from ending up on a personal credit card.
The one-page template above is the same one from the video. Fill it in before you spend money on a logo or a website.
4. Build your online presence
Start with the one platform where your audience already spends time, whether that's Instagram, TikTok, or LinkedIn, and add a simple website as your home base.
Steps to get started:
- Pick your platform: choose the one place your ideal client is most likely to see you.
- Create a website: tools like Squarespace, Canva, or Leadpages can get a clean site up without hiring a developer.
- Stay consistent: use the same colors, fonts, name, and tone everywhere, so someone who finds you on one platform recognizes you on the next.
5. Track expenses and set aside taxes from day one
Tracking expenses shows you whether the business is actually making money. The tax part catches a lot of first-time business owners off guard. When you work for yourself, no employer is withholding taxes from your pay. You may owe self-employment tax, which the IRS sets at 15.3% (Social Security plus Medicare), on top of income tax. And if you expect to owe $1,000 or more for the year, the IRS generally expects you to pay estimated taxes during the year instead of all at once in April.
The easiest habit is to move a set percentage of every client payment into your tax account the day it arrives. A tax professional can help you pick the right percentage for your situation. For more on this, read tax tips for freelancers who want to scale.
Tools to help you track:
- Relay: useful for organizing money across multiple accounts.
- Wave: a free option for invoicing and tracking expenses.
- Spreadsheets: a no-cost way to log income and expenses by hand.
If your income swings from month to month, thriving despite irregular income covers how to pay yourself a steady amount while the business grows.
What to do this week
- Decide between sole proprietorship and LLC, and check your state's filing rules.
- Apply for your free EIN on the IRS website.
- Open a business bank account and set up a separate tax account inside it.
- Fill in the one-page plan, including what you'll spend before your first sale.
- Start a simple expense log, even if it's just a spreadsheet.
- Try Relay: sign up here to organize your business money.
- Plan it out: use the one-page plan template from step 3.
FAQ
Do I need an LLC to start my first business?
No. Many first businesses start as sole proprietorships, which usually need little or no paperwork beyond any local licenses. An LLC adds a separate legal entity and state fees. The SBA's comparison and an attorney or accountant can help you decide what fits.
Do I need an EIN if I'm a sole proprietor?
Many sole proprietors without employees aren't required to have one and can use their Social Security number. Getting an EIN is free, though, and it lets you keep your SSN off client forms. Check the IRS EIN page for the current rules.
When do I have to start paying quarterly taxes?
The IRS generally expects estimated tax payments if you expect to owe $1,000 or more for the year. Due dates and exceptions are on the IRS estimated taxes page. A tax professional can help you figure out what you owe.
Education only. Not legal or tax advice. Business registration rules vary by state.
You made it to the end. That's a Strategist doing research with a purpose.
