According to the Bureau of Labor Statistics, about 16 million Americans are self-employed in today’s growing freelance economy. Only a small percentage of these self-employed individuals have additional employees working for them and if they do, it’s not very many. Because of this, entrepreneurs are required to manage a variety of business and personal tasks on their own each day if they intend to run a successful business. Staying organized financially can help lessen the overall stress load and reduce concern about business stability, allowing individuals to place their focus on daily operations that really matter.
Separate Personal and Business Finances
If you’re a self-employed entrepreneur with no employees, in order to save time and make your life that much easier, you might resort to using one bank account for personal and business finances. Although this plan seems convenient now, it will most likely cause more headaches down the road. It’s important to know why separating your business and personal finances will benefit you financially.
To begin with, purchases and expenses can easily get mixed-up and lost in the shuffle if all your transactions are going through the same account. Organize and save a copy of your receipts in separate folders along with any electronic statements or invoices you have filed. Don’t forget to jot down notes on your receipts or transaction history about your reasons for purchasing. Should there be any explanation needed in the future as to why you bought something, you won’t have to rely on your memory. It’s more than likely that this organizational practice and documentation will be to your benefit and help you avoid any future confusion.
Take Advantage of Business Deductions
Most business expenses are tax-deductible, meaning you should be writing these expenses off to save money, especially if you’re self-employed. Refer to a list of all small business tax deductions to determine which specifically might impact you. Business lunches, equipment, and any additional supplies needed for meetings can qualify for a tax refund and allow you to save some cash. With that, make sure you’re also keeping track of when you use personal items for business purposes. Come tax time, this could be considered for deductions as well.
Automate When Possible
Technology is a great tool when applied correctly and utilized to make your daily workflow easier. Take advantage of digital tools that can help minimize your time and involvement and allow you to work on other things. Using a tool for invoice processing and adapting an automatic system for cash flow will be helpful and allow you to stay on top of bills without daily stress. Ensuring your customers receive their bills on time is just as important as paying your own on time. If you’re inconsistent with sending out statements and bills, you can’t rely on customers to return and pay you at the rate you expect. Review the invoice software options on the market to determine which would best align and benefit your business purposes.
Use Mobile Tech to Keep Up to Date
Our society is constantly reliant on cell phones and mobile devices. We expect these devices to keep us updated and informed throughout the day on topics from the news and weather, to social media and entertainment. There is no excuse for being unorganized when we have these devices at our fingertips. One way to organize our personal lives and finances is to use a mobile banking account with no hidden transaction fees, which will allow you to spend and save money on the go without the stress of traditional banks. This is an easy way to track your spending around the clock, set reminders and make changes at a moment’s notice. No need to worry about personal bills when you have a business to run.
There are also numerous options in the world of apps that you can download on your mobile device to help better organize your personal schedule and boost productivity. If you prefer to keep track of your daily tasks by the hour, there’s an app for that. If you prefer to use your Google calendar and plug in appointments with reminders and updates, that can also be done. Consider syncing your calendar with your family members or any employees to keep excessive communication to a minimum–as everyone that needs you will know exactly where you are. You can get as specific as you want to make your life easier and ensure you’re getting where you need to be on time.
Plan for the Future, Good or Bad
Planning for slow months as a business owner isn’t something you’re probably looking forward to, but it is imperative that you do so anyway. Budgeting for slower months, depending on your business, can boost your success when your business is in full swing. If you base your spending habits on your lowest month of revenue, you will be more prepared and can invest any extra money back into your business for things you have been waiting to purchase. Regularly review and revisit your goals as they will likely change throughout your initial years as a business owner.
Seek Professional Advice
It’s absolutely a good idea to sit down regularly with a financial advisor, tax advisor, and even get tips from successful business owners and entrepreneurs you know. Professionals can provide an action plan if you feel as though you are unsure of your goals or where you should be headed in the coming months. Taking the time to prepare and organize always pays off in the end. Finances are so heavily tied to the success or failure of a business that there is no room for experimentation and figuring it out later. C0ncrete, actionable steps are the only way to ensure you are maximizing areas that you can control. Don’t let your business suffer or fail due to disorganization and improper planning.
There is no reason to feel like you have to master all aspects of running a business, maintaining finances professionally and personally, while still making time for other areas of your life. There are numerous resources available to help streamline, automate, and organize our daily tasks to further develop entrepreneurial skills and business management techniques. Regular refinement and prioritization are key to maintaining and growing a business that you’re proud to build and call your own.