Money really does make the world go round, especially in small businesses. Many entrepreneurs set out on their own because they want to make money, and earning money is the only way to keep the business going. Finances might not be the most thrilling aspect of your new business, but you need to stay on top of it if you want to keep your doors open beyond the first few months. Here are a few tips to help you out.
Keep personal finances separate
Hopefully it won’t come to this, but if your company is sued then you’ll be thankful to have your business finances separate from your personal assets. Many business owners own and operate their businesses as sole proprietorships. Unfortunately, this means that if the company is sued, the owner’s individual assets, such as their cars or home, are fairly easy to attack or attach in a court of law. You can avoid this by putting all your business expenses on a business credit card, and opening a separate business savings account.
Nobody likes doing it, but everyone has to pay taxes. However, taxes get a little more complicated when you’re a freelancer working by yourself. Are you self-employed, or do you technically have an employer if you mostly do work for one client? Then again, if you’re not on payroll then maybe you are self-employed. You can easily check out your employment status for tax purposes through the government website. It’s best to get it figured out as soon as possible, before you’re in violation of the IR35 – legislation designed to combat tax avoidance, specifically targeted at individuals who are providing services through their own limited companies. Reputation is everything to a fledgling business, so the last thing you want is a tax violation on your record.
In the early days of business there probably isn’t enough money to go around, so you can’t afford to waste it on frivolous expenses. If you’re renting an office, keep your bills low by implementing some green policies; unplugging all your unused electrical devices, switching to LED lightbulbs, and turning everything off at the end of the day. However, it might be cheaper for you to work from home until you’ve started to make a bit more money. In the meantime, find ways to advertise on a budget, such as setting up a free website, using social media, and encouraging customer feedback. Use your good reputation to get more customers.
Consult an expert
Maths and finance aren’t everyone’s cup of tea, but you can’t let the numbers tear your business down because it’s too overwhelming. If you can’t wrap your head around the figures, then find someone who can. Sometimes, it pays off to engage the services of an expert, even if it is on a part-time basis. They can help you determine where your business is, where it is heading by using and analyzing your data. They can even guide you on the next step your business should take.