How To Manage Your Finances As A Solo Business Owner
When you’re just starting out solo with your business venture, one of the most important things you’ll need to do is understand how to manage your finances. Going into this with a sound budgeting system is essential so that you are able to not only survive but grow in the long term. The most common reason for businesses failing is that they run out of money and begin to have cash flow issues. Here, we have some helpful tips on how to manage your finances as a solo business owner.
Embrace accounting software
When you are trying to cut costs, simply using a spreadsheet to manage your accounts can be tempting – and sometimes, it is fine. To really stay on top of things and lessen the risk of making an error, consider using some cloud accounting software. There are plenty of low-cost options out there that you will find helpful. Make sure whichever one you choose has what you need for your business. Do you need to be able to send invoices? Does it need to be linked to your account? Asking questions like this will help you to choose the right one.
Have Separate Personal And Business Banking Accounts
Separating your personal money from your business money is essential. As soon as you start your venture, you need to open up a business account to save them from getting mixed up. It will help you to avoid any tax disasters, make account keeping much more straightforward and allows you to keep an eye on your business cash flow.
Put Money Aside For Your Taxes
Having a saving account that you put your taxes into will ensure you have enough to pay your tax bill, so you won’t get stung and have to cough up the money when you may not have it. Putting around 30% into your savings account should cover your tax bill and other mandatory payments, although you should always seek professional advice.
Apply For A Small Amount Of Business Credit
It’s a good idea to establish access to credit before you need it. You never know when you’ll need a little help, and it’s easier to have it ready then have to panic if you need a little extra money. It also helps to build up your business credit score, so even if you don’t use it, it’s helping you out.
Keep Some Money Aside For Emergencies
Having an emergency fund of around 6-12 months of expenses will help you to cover the unexpected should you need it. Sometimes you will have customers paying late, or unexpected bills cropping up, so having something to fall back on can be helpful.
Hopefully, this advice will help you to manage your finances as a small business owner. By starting off on the right foot, you should avoid any significant problems and make running your business a lot less stressful.
Do you have financial advice or tips that have worked for your business? Leave them in the comments below