Tips for How to Wisely Manage Finances When You’re Your Own Boss

Starting your own business is exhilarating and a thrill that can lead to great financial freedom. The key is learning how to manage your business finances wisely. Even if you’re great at managing your personal finances, business finances should be handled in a different way. Here are some tips that you can use to make sure that your business stays financially stable and profitable.

Have a Clear Budget

Your business budget will look very different from a personal budget. Your budget for business should not only include your accounts payable and accounts receivable, but it should also have your monthly, quarterly, and yearly sales goals. Having those goals within your budget will make sure that you stay on track with your marketing efforts and how you’re promoting your business so that you can bring in new clients without having to scramble for them.

Take Care of Financial Obligations on Time

There are a lot of moving parts to a business, but one of the things you want to make sure that you’re ahead of is paying any of your financial accounts before they’re due. That includes your retirement planning, which could include the use of a simplified employee pension, and taxes. When filing taxes, it’s a good idea to contribute up to 25 percent of your self-employment income when using an SEP. Set aside the money before you have to file it and that way you won’t have to scramble to come up with it or figure out which project you’re going to take it from.

Keep a Separate Bank Account

The area of bank accounts is where a number of business owners trip themselves up before they even get started with running their business. While it may be easier to just keep your business finances attached to your personal bank account and make a note or keep a spreadsheet of what is personal and what is business, having a business account will take the added stress of separating your finances off your shoulders and help you do AP/AR more efficiently. It will also make it much easier on you during tax season when you need to be able to easily report your expenses or set aside taxes, as discussed earlier.

Starting your own business successfully takes a lot of work. Making sure you manage your finances wisely is one of the most important things you need to take care of if you want your business to thrive. By using these three tips, you can easily set yourself up for financial success in your business.

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