Online Business Accounting Tips: Finances, Bookkeeping, and Corporations for Side Hustlers [LNIM137 Transcript]

Should you form a corporation for your side business? What about bookkeeping? Do you need accounting software? These financial questions paralyze new entrepreneurs, but the answers are simpler than you think. In this episode, Mark cuts through the confusion with practical accounting tips for part-time online business owners, from separating your finances to choosing between QuickBooks and FreshBooks.

What You'll Learn in This Episode

• Whether you need to form an LLC or corporation when starting out
• Why keeping business and personal finances completely separate is non-negotiable
• How to handle bookkeeping without being an accountant
• When to use QuickBooks Online, FreshBooks, or WaveApps
• The one accounting setup tip that will save you headaches at tax time
• Why 50 million new keyword phrases appear on Google every hour

Episode Summary

Mark opens with a fascinating SEO news item: Google processes roughly three trillion searches per year, and 15% of those searches are brand new queries that Google has never seen before. That translates to approximately 50 million new keyword phrases every single hour. For content creators and affiliate marketers, this means there is always fertile ground for new content. It is never too late to start.

The main segment tackles three common financial questions that new online entrepreneurs ask. Mark leads with a strong disclaimer: he is not an accountant, not a tax attorney, and not professionally trained in finance. If you need real accounting or legal advice, seek it from a professional.

Should you form a corporation? Mark's answer for most part-time entrepreneurs: not yet. When you are making most of your income from a W-2 day job and your side business is generating modest revenue, the tax implications of incorporating are minimal. You will file a Schedule C alongside your regular 1040 and pay something that looks like regular income taxes. Forming an LLC or S-corp becomes worthwhile when you are making enough money that the tax benefits justify the cost and complexity. Until then, focus your energy on creating value in your business rather than getting tangled in corporate filings, business cards, and website footers that distract from actually generating revenue.

Why must you keep finances separate? This is the one thing Mark insists on regardless of your business stage. Go to your bank, open a separate checking and savings account for your business, and use those exclusively for business transactions. Create a separate PayPal account. If you need a credit card, get a separate one for business. The reasons are threefold: if the IRS ever examines your business expenses, a clean separation protects you; it makes monthly profit and loss tracking dramatically easier; and if someone sues your business, that bright line between personal and business assets helps protect your home, car, and savings.

How do you handle bookkeeping? Most people start with a spreadsheet, and many do not even realize they have a bookkeeping problem until tax time when they are frantically digging through emails for receipts. Mark personally uses an inexpensive virtual bookkeeper who collects his transactions and keeps his books current. For software, he recently moved from QuickBooks Desktop to QuickBooks Online because of its integrations with his bank, PayPal, and Shopify. FreshBooks is another solid option, and WaveApps is a free alternative that accountants recommend highly. Mark's pro tip: even if you do your own books, pay an accountant to help you set up a proper chart of accounts. This gives you a professional foundation that a real accountant can work with when your business grows.

Key Takeaways

• Do not rush to form a corporation. Focus on creating value first and incorporate when the financial benefits justify it.
• Keeping business and personal finances 100% separate is non-negotiable, even as a sole proprietor
• Separate finances protect you in three ways: tax defense, monthly P&L clarity, and liability protection
• Choose accounting software early: QuickBooks Online, FreshBooks, or WaveApps (free)
• Pay an accountant to set up your chart of accounts properly, even if you plan to do your own bookkeeping
• Consider a virtual bookkeeper. They are inexpensive and save you from doing work you probably hate.
• There are 50 million new keyword phrases on Google every hour. It is never too late to start creating content.

What's Changed Since This Episode

Mark recorded this in May 2017, and while his core financial advice remains sound, several things have evolved.

LLC formation has become trivially easy and inexpensive. Services like Stripe Atlas, Firstbase, and state-specific online filing portals have reduced the cost and complexity of forming an LLC dramatically. Many entrepreneurs now form an LLC as one of their first steps for liability protection, even before generating revenue. Mark's advice to focus on value creation first is still wise, but the barrier to incorporating is much lower than it was in 2017.

Accounting software has improved significantly. QuickBooks Online and FreshBooks have both added AI-powered transaction categorization, bank feed automation, and integrations with virtually every payment platform. WaveApps was acquired by H&R Block in 2019 and remains free for basic accounting. Newer options like Bench offer bookkeeping-as-a-service where humans backed by software handle your books monthly for a flat fee, which is essentially what Mark describes doing with his virtual bookkeeper but packaged as a subscription product.

Sales tax has become more complex for online sellers. The 2018 Supreme Court ruling in South Dakota v. Wayfair established that states can require online sellers to collect sales tax even without physical presence. This means ecommerce sellers now potentially owe sales tax in dozens of states. Tools like TaxJar and Avalara automate this, but it adds a layer of complexity that did not exist when Mark recorded this episode.

The keyword opportunity Mark describes has only grown. With voice search, conversational AI queries, and increasingly specific long-tail searches, the volume of new search queries continues to expand. For content creators, this means the opportunity to rank for underserved topics is larger than ever.

Resources Mentioned

• QuickBooks Online — accounting software
• FreshBooks — accounting software
• WaveApps — free accounting software
• Google: 15% of Searches Are New (Search Engine Land)
• LNIM137 Show Notes — Online Business Accounting Tips

Related Episodes

If you found this episode helpful, you might also enjoy:

• LNIM137 — Online Business Accounting Tips (companion show notes)
• LNIM140 — How To Get Started Online
• LNIM136 — Procrastination Tips: Overcoming Fear

Listen and Subscribe

Listen to Late Night Internet Marketing on Apple Podcasts or subscribe at latenightim.com/internet-marketing-podcast/. Have a question for Mark? Call the digital recorder at 214-444-8655 or drop a comment below.