Small businesses have a hard time managing their finances. This is because the owners of these small businesses have to worry about both the business’s finance as well as personal finance. Both have different priorities and juggling both at the same time can quickly get out of hand if you are not careful. Since you can’t neglect either one, here are some tips to help you get your finances in check.
1. Think About Setting Up A Retirement Fund
No matter who you are, everyone needs to have a retirement plan in place to help you become financially secure when you can’t work anymore. You don’t have to put a lot of money into your fund. But what you do put in will grow tax-deferred until you decide to use it for retirement later down the line. There are multiple options when it comes to retirement and each has their advantages. So you need to do your research on what will work the best for you and your retirement goals. You can take the help of a financial planner if you are unsure about the process.
2. Diversify Your Investments
We have all heard the old adage- Don’t put all your eggs in one basket. This couldn’t be truer when it comes to money. Diversification is one of the pillars of investment. Most small entrepreneurs put all of their personal finances into their business. This is a very risky move as only 50% of small businesses last 5 years. By having your money spread out in different ventures you are giving yourself a safety net. You will be relatively fine even if one of those ventures fail as there are others to help keep you afloat.
3. Keep Your Business And Personal Finances Separate.
There are a lot of advantages to separating your personal and business expenses. Firstly, you are diversifying a little bit which is always a smart move. Other advantages include
• Tax Season gets easier when you are deducting business expenditure.
• Your business gets more credibility and legitimacy.
• You are safeguarding yourself from liability should something happen to the business later down the line.
• Avoiding the pressure that businesses can put on personal finances.
Open a separate business account for your business expenses and get a business credit card for business use only. This will help build your business credit and also separate your business and personal finances.
4. Plan For The Off Season With Emergency Funds Prepared
An emergency fund that is kept aside for a rainy day can be extremely helpful for your business. Businesses do not tend to boom every month. Some months will be tight and having an emergency fund for those desperate times can really help you save your sanity and your business.
5. Automate Your Bills
Automating your bills means that you don’t have run behind them every month trying to clear them. This saves up a lot of time to do absolutely anything else you’d want- spend more time with family or put in more hours into the business. But having automated bills will definitely help you stay on top of all those pesky bills.