Managing your money when you work for someone else is easy. Your employer will take care of making sure that all of the proper taxes and deductions are taken out of your pay check. When you own your own business or are self employed, however, managing your money becomes quite tricky. Thankfully you don't have to be a money genius to keep your business afloat. You also don't have to be a money genius to make a profit!
The main trick to managing money when you work for yourself is to keep strict records. Those records must be meticulously organized. The last thing you want is for the government to audit your finances because you've misplaced your business lunch receipt! Trust us, things like that do happen!
Here are some hints to help you manage your business money and make sure that everything gets taken care of correctly:
1. Make sure that, with every sale you make, some of the profit gets put aside. You are not exempt from government taxes just because you work for yourself. The truth is that your taxes are often higher. This is because, unlike when you worked for someone else, you are solely responsible for paying your taxes to the government. As an employee, your boss took care of some of that financial burden for you. Set aside a set percentage of every sale you make so that, when it comes time to pay your taxes every year, you won't be scrambling to find the money to keep the government happy.
2. If math is not your strongest skill, you should definitely spend some extra money and hire a proper accountant. Having a skilled accountant will be a godsend if you do not have experience with business finance. When you hire an accountant you can trust, you simply hand everything over to them and they take care of making sure that your profits get to where they need to go-distributors, employees, the government, your bank account, etc.
3. Write down everything! Keep everything! There is no such thing as a pack rat when it comes to money and business. Keep every receipt; keep a copy of every invoice. This is not paranoia. You want to have a physical record of all money coming into your business and all money leaving your business. Every last pound must be accounted for. Keep all of your receipts and invoices in a central location. File them by date so that they can be quickly located. This will save you quite a bit of time searching later on when somebody wants to know where you and a client had lunch on a certain day.
To be honest, keeping track of your money when you own your own business or are self employed is not hard, it is simply time consuming. If you take the time to set up your records properly when you open shop, you will save yourself hours of headaches later on!
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