If you’re a lone entrepreneur, or a solopreneur, you’re going to want to make a success of whatever venture you choose to follow as best you can. However, one of the most important ways you must do this at the start is by knowing how to manage your finances. Managing your finances is absolutely key to your success, and if you can’t get to grips with this, you shouldn’t expect to be very successful at all.
Below, we’ll discuss 5 things you should be doing to manage your finances. Take a look and see if there’s anything crucial that you’re missing:
Separating Your Business Accounts as Early on as Possible
Separating your business accounts is one of the things you should do from the very start. Why? Because it makes it far easier to separate your personal and business expenses, and you won't be affecting your personal credit score with purchases either. It’ll also make it far easier for you or an accountant to take care of your taxes, as expenses will all be in one place.
2. Preparing for Your Taxes Throughout the Year
Preparing for your taxes throughout the year stops you from being hit with a massive bill and then being unable to pay it. There are many services that offer small business tax return so that you can stay on top of your taxes and get them paid on time without taking any time away from your core processes and what you do best. The last thing you want is to stress that you haven’t completed the return properly, and the right accountant will help you to legitimately keep as much money as possible.
3. Avoiding Unnecessary Purchases for Both Personal Use and Business Use
Whether this is for business or personal use, you should avoid unnecessary purchases. It’s normal to want the best gadgets, software, premises, and staff/freelancers, but investing in these things early on could mean money you could have put to better use on an emergency fund. You will experience issues at some point, and you need to be financially prepared for them. Don’t go out and buy a sports car or the latest iMac, as it’s highly unlikely you really need them.
4. Invoicing Promptly and Consistently to Get Paid
You should have an invoicing process that is prompt and consistent. If you don't invoice promptly and consistently, your clients won’t pay on time, if at all. If an invoice isn’t paid within 90 days, it’s unlikely to get paid - don’t give your customers a chance to forget about payment.
5. Save an Emergency Fund ASAP
An emergency fund is imperative, as you never quite know what could happen when you’re just starting out, and even when you’re established. Have at least 3 months running expenses behind you so that you have peace of mind running your business during quiet months.
Are you managing your finances correctly? Leave any of your own tips and tricks for finance management below!