We have a guest blog today from Jim McKinley. Jim is a retired banker with almost 30 years of experience. He created MoneywithJim to share his advice and other resources on a variety of financial topics and has generously offered up some of his advice to us here:
Starting a new business comes with a lot to think about, especially if you work from home. While many people think it sounds like a dream come true, it’s actually harder for many self-starters to get work done from a home office because there are more distractions and less accountability. It can be difficult to figure out your business expenses when you’re just starting, so it’s important to do some research and network with other small business owners in order to get some helpful advice.
It’s also imperative to stay on top of your tax responsibilities, as there are several details involved where self-employed individuals are involved. Keeping a separate savings account or another fund specifically for tax payments will help you keep track of where you are financially and prevent any nasty surprises down the road during tax season. It will also reduce the possibility that your personal finances will get mixed in with your business concerns.
Read on for some great tips on how to keep your finances in check when you’re a small business owner.
Figure Out Your Daily Priorities
Although every small business will have its own specific needs, it’s important to make sure your daily financial responsibilities are met. Track your earnings and expenses with free software, which will help keep your spending in check while you stay on top of all funds coming in and going out.
Set a Budget
Every business must have a budget, and it’s imperative that you stick to it as closely as possible in order to prevent overspending. It can also help you keep your personal finances separate from your business, and this is one of the first rules of running a small business. Consider downloading an app like Mint, Wally, or You Need a Budget to help you manage your expenses on the go and keep track of your credit score.
Hire an Accountant
Even if you know how to do your own accounting, it’s always a good idea to have a second set of eyes to look over your books. Hiring an accountant will ensure that your tax responsibilities are taken care of, which can keep you on the level with the IRS and prevent any issues down the road. Because individuals who are self-employed need special tax forms and often pay their taxes quarterly instead of annually, it’s essential that you have a good understanding of your business’s needs.
Understand Your Business Model
Your business model will vary depending on where you live, whether you have a brick-and-mortar store or run it exclusively online, and whether your products or services are dependent on seasonal business. Most companies have an ebb and flow throughout the year, so it’s important to have a cushion in your savings account for the slower times.
Minimize Distractions and Get Organized
Working from home or being your own boss can lead to lots of distractions, so it’s important to get organized and create a workspace that will allow you to stay focused. The minute you let daily interruptions keep you from your business, you’re much more likely to start losing money.
Starting your own business is a great way to boost your career, but certain steps should be taken in order to make it a viable option. Staying focused can be difficult, so come up with a business plan that will allow you to stay on track. It’s also a good idea to network with other local business owners in order to garner support and advice for the future.
- Jim McKinley, MoneywithJim