If you’ve recently started your own business, congratulations! You have taken on one of the most challenging yet rewarding things you’ll ever do. While being optimistic about the success of your business is important, it’s also crucial to manage your money effectively to avoid future financial trouble.
Don’t let bad budgeting slow down the growth of your business. Here are some important saving tips to help you develop proper money management habits.
Don’t spend money as it comes in
Stick to a budget and spend money wisely, even if your business seems to be doing better than usual. When you start working for yourself, you may find that some months your business absolutely thrives and other months it doesn’t do as well. While money is coming in, you may develop a false sense of security and end up spending money you may need in the future.
Separate personal and business expenses
It’s important to keep your personal and business expenses separate from the start. Make sure you set up a business account and a personal account. This will ensure that you keep track of your spending effectively and don’t run into any problems with IRD during tax season.
Make paying off debt a priority
Self-employment comes with many challenges, such as clients not paying you on time, high taxes and managing two sets of finances. To ensure you don’t get into deep financial trouble, pay off debt as fast as possible.
Set money aside for taxes
Make sure you set aside money for all expenses, including taxes - this is your responsibility when you’re self-employed, saving into a fixed account will provide extra security for if you have any financial problems.
Determine your monthly expenses when estimating your monthly earnings. This can be difficult, especially if you don’t receive a fixed amount every month. Try your best to estimate what your monthly earnings will be and make sure you keep money above and beyond your estimated amount each month to make up for months where you don’t receive as much income. You need to make sure that you can cover all your expenses every month to avoid getting into debt.
Get help from your accountant
Most people are afraid to talk to their accountant because they think it’ll either cost them too much money, or they think their accountants will roadblock all their ideas. This shouldn’t be the case. Setting up a meeting with your accountant could save you thousands in the long-run, even better, it will probably increase your business’s chance of success dramatically.
At NexGen we offer all our customers and non-customers the opportunity for a free one hour financial assessment that could set you and your new start-up in the right direction for consistent growth.