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How to Make Smart Financial Moves When Starting a Business

Starting a new small business can feel so exhilarating, especially when your new business encompasses ideas that you’ve felt passionate about for a long time. However, starting a new business comes along with a lot of financial responsibilities that can start to feel overwhelming if they aren’t handled properly. Here are a few ideas that will help you to make smart financial moves when you’re starting your business.

Don’t Take on Too Much Debt

Make sure that you don’t take on too much debt as you’re starting your business. Getting set up will require some finances. You might have to take out a loan to obtain the necessary rental property or equipment to get your business started. However, if you take out too many loans, you might be in debt for several years before your business is financially profitable. So, it is smart to not take on too much debt when you’re getting started. Try to save when possible. 

 

For example, if you’re starting an online eCommerce business, rather than renting a warehouse, try to work from home and use home office deductibles to save money. This can help you to save up for the warehouse when you’re more financially stable. 

Create a Tax Strategy

There are many different approaches and strategies you can take to handle your small business taxes. Different approaches might work better for you depending on the setup and situation of your business. For example, setting your business up as an LLC could be beneficial because they require minimum compliance and could increase your tax write-off opportunities. 

Forming an S-corp can help you reduce the FICA taxes you pay. There are also additional ways to reduce your taxable income as a small business owner or entrepreneur. Make sure to educate yourself about your tax situation so you don’t pay more taxes than you have to. 

Track Your Fixed Expenses

One essential part of budgeting successfully for your business is tracking your fixed expenses. This refers to expenses that are constant and consistent for your business. When you track those expenses, you’ll be able to see if you can lower your fixed expenses. For example, you could use contracted workers or freelancers instead of employees. You could also work from home for a time and use your home office space as a tax-deductible rather than paying for monthly office rent. Tracking your fixed expenses will also help you to know how to price your products and services to make a profit. 

 

So, as you’re trying to get your small business off the ground, remember to make smart financial moves. Make sure that you don’t take on too much debt, create a tax strategy, and track your fixed expenses to help your budgeting. All of these approaches will be beneficial in your journey to make a profitable and successful business.

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