Research shows that only about half of small businesses survive past five years. Don’t want to be a negative statistic? You’ll need to take an honest look at your wallet, bank account, and financial habits.
Smart budgeting can help you weather storms- and it can help you be a more creative, dynamic entrepreneur.
Let’s get into the top tips!
1. Stay On Top Of Your Budget
In most businesses, budgets just aren’t consistent. You’ll have to be prepared for fluctuating costs, one-off expenses, and hiring new vendors.
It’s smart to revisit your budget your monthly and yearly budget at least once every three months. This analysis enables you to assess your finances and determine if there are any areas you need to focus on reducing.
2. Aim To Save A Third
It’s easy to lose sight of long-term expenses or goals when you run a business. This is especially true if you’re just starting, and you have lots of great ideas that need funding.
However, you’re responsible for withholding the appropriate amount for taxes. You’re also responsible for financially cushioning your business if and when problems start to arise.
As a general rule of thumb, aim to save a third of everything you make. This should help you account for taxes, savings expenses, and emergency costs.
3. Don’t Forget About Time
We’ve all heard the saying, time is money. In a small business, this saying can help make or break your company’s financial success.
Timing impacts costs. When you start treating your time as your money, you tend to work harder and smarter.
Whether it’s email marketing or a pay stub creator, you also learn how and when to outsource and automate different tasks. Even if it costs you more upfront, it tends to pay dividends in the long run.
4. Set Up Your Retirement Accounts
Like any working professional, you need to be prepared for retirement. However, unlike conventional workplaces, you don’t necessarily have someone helping you do it. Therefore, it’s your responsibility to save appropriately.
Saving can be incentivizing. Small business retirement accounts can reduce your taxable income. The funds also grow tax-free until you use them in retirement.
Plan options include:
- Simple IRA
- Sep IRA
- Solo 401(k)
- Simple 401(k)
You need to do your research to determine which retirement plan works best for your needs.
5. Consult With A Tax Professional
Yes, you can do your taxes. However, unless you’re a guru in the business tax code, you’ll probably end up saving tens of thousands in tax dollars if you consult with a professional.
Accountants can help you determine the obligations you hold depending on your business entity. They can also help you maximize tax deductions.
Final Thoughts on Smart Budgeting
As a business owner, taking smart budgeting tips to heart will help you, your employees, and your company. Your income and expenses are two of your most important assets. If you nurture them, they will nurture you in return!
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