We all want to ease stress when it comes to money. If you are looking for clarity surrounding this topic as an entrepreneur, you are definitely not alone. Keep reading this post for the top 3 ways to gain financial peace in your business.
Every paycheck that comes in needs to be separated into different accounts. Your personal and business finances should always be separate. This makes paying your taxes, managing operating expenses, taking a business profit, and paying yourself so much easier. Start with these 4 categories to create an easy working system. But, how much money do you need to put into each account?
I like to refer to the Profit First system by Mike Michalowicz. Here’s the breakdown:
You have to pay yourself as the owner of your business. Since so many small business owners are passionate about what they do, they do not pay themself enough from the start. If you want to run a sustainable company, make this a priority.
This is the profit your business is making. You always want to be profiting! Many business owners are unsure if they are actually profiting, so clearly separating this is incredibly important.
Tax can vary in every state so you might need to adjust accordingly. When it is time to pay your taxes quarterly and yearly, you will know exactly which account this is coming out of and you will have an idea of how much you will be paying.
Operating expenses are simply the cost of doing business. Anything from paying your employees, purchasing supplies, paying your office rent, and more adds up. Notice how this is your second highest percentage. Having an account just for operating expenses will save you a headache in the future.
The main source of financial anxiety from business owners comes from not understanding their money movement. You need to know exactly what is coming in and going out every week. Plan a weekly money date to review paid bills, unpaid bills, upcoming hired contractors (I see you, wedding pros!), and upcoming income.
To ensure you are tracking all of this data accurately, I recommend using Quickbooks Self Employed. This is one of my favorite business tools that tracks all of your money flows with organized software. When you stick to these money dates, you will have a firm understanding of your cash flow. As a result, your anxiety surrounding this major aspect of your business will be relieved!
While it is important you are knowledgeable and aware of your business finances, I always recommend hiring a professional accountant that you trust. They will make sure all of your financial reports are super accurately managed from client billing to payroll, taxes, and more. If there are any adjustments or corrections needed, they will catch them and work with you on this.
As your business grows, you might also bring a financial planner on board. Molly Berger is a wonderful, reputable financial planner and advisor for small business owners. For all of my fellow women entrepreneurs, feeling empowered regarding your business finances is crucial. Molly will help guide you so you can handle your business finances like the boss you are.
Lastly, a bookkeeper can be a great asset to your business. They will document all of your finances for you, keeping accurate records. This can be a major time saver. Independence Bookkeeping is a great bookkeeper for small business owners.
If you enjoyed this blog, check out my 3 super simple rules for selling next!
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