Guest Post by Jim McKinley, Financial Expert:
As a small business owner you are adept at your trade, but you might need help handling finances. Follow these tips to ensure you are planning and prioritizing properly.
Organizing money. Organizing your funds will help you budget and keep on top of your bills.
- Separate accounts. According to the experts at Forbes, your first priority should be maintaining completely different accounts for personal versus business funds. Things can get confused quickly. Having separate pockets helps simplify bookkeeping.
- Hire an accountant. Accountants know tax laws and money management, and can help you find deductions and avoid penalties.
- Weekly maintenance. You need about fifteen minutes per week to keep your records organized. Clear part of your schedule and don’t allow interruptions. Keeping on top of your records helps you know where your expenditures are, meaning less stress and wiser choices.
- Track labor costs. This applies whether you have a full staff or if you are flying solo. Stay on top of wages, benefits and incentives and make sure you are balancing your budget.
- Pay your bills. Even though this sounds obvious, many small business owners neglect their basic expenses. If you don’t stay organized it’s easy for things to slip through the cracks.
Raising money. Sometimes outside funds are needed to reach your budget goals.
- Investors. If you are fundraising or seeking investors, the experts at Inc. recommend finding support through those who share in your vision and goals.
- Startup costs. Use technology to your advantage so you have minimal outlay. You have the option of hiring remote assistants for bookkeeping and administration and you can do marketing through social media. Meetings can take place through web-based services as well.
- Loans. Once you know your annual budget you might decide you need a loan. Some experts suggest applying for your full amount in separate parcels. For instance, if you know you need $100,000 for the year, you apply for a $25,000 loan at the beginning of the year, then apply for another $25,000 in a few months. This way you don’t begin paying interest on the full amount right away.
Advice for freelancers and remote workers. As the telecommuting workforce grows more people are dabbling in freelancing or running a business from home.
- Freelancers. Freelancing is risky without a financial plan. Set yourself up for success with proper money management. You need to be especially cautious and plan for times when your business dips or when you have slow-paying clients.
- Taxes. If you are freelancing or otherwise working as self-employed, some experts note that it’s particularly important to set aside funds to pay taxes. With no employer withholding funds you will be paying all those costs from your gross income.
- Savings. Consider at least one savings account completely separate from your personal savings. When your market is sluggish you will have a dependable reserve. Plan on saving enough to cover your income for six to eight months.
- Remote workers. Maybe you are one of those people working from home as a bookkeeper or web-assistant, or you are thinking of transitioning to remote work. Some experts advise it’s extremely important for you to manage your time well, not just your money.
- Set office hours and keep them. You need to have self-discipline to stay on track.
- Develop a routine that will compliment your work style. If you are a morning person, do the tasks that take the most concentration in the early part of the day.
- Set goals. Put some goals together for your days, weeks, months and for the year. Benchmarks will help you prioritize and stay on task, and will also help you evaluate how well you are doing.
Set for success. By getting organized you will be able to manage your business’s funds wisely. You also will be able to assess any need for outside funding and how much you would require. If you are freelancing or otherwise working remotely, you will need to manage both time and money wisely. Using these terrific tips will keep you and your business on track.
This week’s post is courtesy of Jim McKinley: “As a retired banker, I’ve worked with many business owners over the years, many successful others not so successful. For business owners, there is a near endless number of tasks to manage. Especially when you’re first starting out, it can be difficult to gauge which fires are real fires and which can wait. One big difference I saw between those who were successful and those who weren’t is that successful business owners recognized that business expense problems were always “real fires.” They saw that cash flow and inventory management issues couldn’t wait and recognized that tax preparation was something that happened year round. I offer anything from a well-informed, personally-written article to resource lists and everything in between. Simply let me know what you’re looking for, and we’ll get started. By the way, in the interest of helping people’s pockets, all of my services are absolutely, 100 percent free of charge.”