Kat Boogaard
Self-Employed? Here's Why You (Really) Need a Separate Bank Account for Your Business
As someone who’s self-employed, you’ve probably heard a few (or many) times how important it is to separate your business finances from your personal...
You’re juggling a lot as a solopreneur. You’re marketing your business, growing your network, refining your products and services, and sharpening your skills—all while staying on top of the client work that actually pays your bills.
With so much on your plate, it’s easy to let things slip. And one thing that’s all too easy for solos to lose track of? Finances.
You probably didn’t start your business-of-one because you’re passionate about bookkeeping, and that makes it tempting and easy to continue overlooking your cash flow, taxes, and more. But while these aren’t the most enjoyable parts of solopreneurship, they are important.
Have you been burying your head in the sand when it comes to financial management for your solo business? We’ve rounded up six common signs that you haven’t been giving your accounting the attention it deserves—and how you can get back on the right track.
1. You're Always Worried About Having Enough Cash for Next Month
Cash flow problems are among the most common challenges of self-employment. Income can be fickle while your expenses remain steady—which makes you feel like you’re constantly playing catch-up.
Red flags that this is happening to you:
- You regularly dip into your personal savings to cover business expenses
- You’re paying bills late or struggling to decide which to pay first
The solution: You need a better way to understand what’s going in and out of your business so you can plan accordingly. Lettuce sets you up with a business bank account and then automatically tracks the money that’s flowing in and out. It also analyzes patterns to help you forecast what will happen in the future. You can use this information to plan ahead (like setting aside more money during your busy months) so you have breathing room when you need it.
2. Taxes Have a Way of Sneaking Up on You
When you work for yourself, taxes aren’t automatically withheld from your paycheck the way they are in a traditional, full-time job. You’re responsible for paying your self-employment tax, which covers your contributions to Social Security and Medicare. This means you don’t just need to think about taxes once each year—it’s something you need to take care of every few months (when you pay your quarterly estimated taxes). Failing to stay on top of these can cause delayed tax payments, which can mean extra stress and hefty fines.
Red flags that this is happening to you:
- You’re always guessing about how much to set aside for your quarterly estimated taxes
- You've wondered, "Can I delay my tax payment?" more than occasionally
- You lack any tax planning or an overall strategy for maximizing your deductions
The solution: Stop treating taxes as a yearly emergency. When it comes to your taxes, you want less stress and more strategy. Lettuce automates your self-employment tax estimates and sets aside the right amount for you. It will also flag potential deductions you might miss and ensure you stay ahead of all of the tax deadlines.
3. Your Business and Personal Finances Are a Jumbled Mess
Clarity is crucial when managing your business finances, but it’s almost impossible to get when your personal and business accounts are tangled together. Not only do you increase your risk of errors and missed deductions, but it’s also way harder to understand (and improve) your cash flow. That makes tax time significantly more stressful than it needs to be.
Red flags that this is happening to you:
- You use the same account for business and personal expenses
- You struggle to identify which of your expenses are tax-deductible
The solution: Set up a separate business bank account. Lettuce will automatically set up your business bank account and then track and categorize all of your expenses—making it far easier to maintain clear boundaries (and save yourself some money).
4. You Spend More Time on Paperwork Than Client Work
Your finances matter, but you don’t want managing and maintaining them to eat up all your time. When you sink valuable hours into bookkeeping, invoicing, and expense tracking, you’re losing time you could spend growing your solo business and earning more revenue.
Red flags that this is happening to you:
- You procrastinate on financial tasks until they become urgent
- You frequently work evenings and weekends just to catch up on paperwork
The solution: Automation is your new best friend. Lettuce's AI-powered platform handles the grunt work of categorizing transactions, tracking expenses, and maintaining your books—while you remain hands-off. By reclaiming those administrative hours, you can spend more time focused on the work that drew you to self-employment in the first place.
5. You're Doing Fine, But Feel Like You Could Be Doing Better
Most solopreneurs are eager to constantly improve their businesses, but you need benchmarks to help you understand if you’re thriving or simply coasting. While money isn’t everything in business ownership, comparison points help you identify areas for improvement and avoid leaving money on the table.
Red flags that this is happening to you:
- You don't know your profit margins or how they compare to industry standards
- You haven't reviewed your pricing structure in over a year
The solution: You can gain a lot of perspective through data. Lettuce provides you with real-time insights into your financial performance, including a comprehensive view of your profitability, income, and expenses. The dashboard uses visual tools like graphs to help you monitor trends, compare monthly results, and analyze seasonality in your business. You’ll also get projections based on your historical data to help you plan ahead.
Your Solo Business Finances: More Control, Fewer Questions
Self-employment comes with plenty of challenges—but financial uncertainty doesn’t have to be one of them. By spotting (and addressing) these warning signs early, you can transform your relationship with your finances from confused to confident.
Lettuce can help. It was purpose-built for solopreneurs by solopreneurs. From setting up your business bank account and tracking your transactions to managing your cash flow and paying your quarterly taxes, Lettuce can help you go from avoiding your finances to actively managing them.
Ready to go from overwhelmed to on top of things? Get started with Lettuce and take control of your financial future.
