Managing Your Money as a New Business
When starting a new business one of the most important things to consider is money management. Many businesses fail in the first few years not from a lack of skill or knowledge of your products or services, but from the lack of understanding how to manage your revenue to keep the business afloat. Below are few tips to consider when managing your company’s revenue and expenses.
Create a budget (for business and personal expenses)
The first thing you should do as a business is to create a budget so you will understand the minimum amount you need every month to keep your business afloat. A personal budget is also necessary to know how much money you will need to take out of business to take care personal expenses as well. It is good to have at least 3 to 6 months of funds saved up for your business and personal expenses when you are first starting out as it could take some time before your business starts to show a profit.
Don’t spend Revenue on Certain Expenses too Early
As a startup business, you should consider when is the best time to take on expenses such as payroll and office space. There are things that you might have to do on your own as a business owner instead of using much needed revenue to pay someone else to do. Ask yourself if you have a business that you can perform at your home instead of leasing an office. Of course, as you grow there will be tasks that you don’t have the time to do because you are busy doing the services of your business. Until that time comes you should spend your company’s income wisely.
Save Money for Taxes
As a startup business, it is very important to understand how you pay your taxes. You are responsible to pay all the taxes for your company and to pay them on time. If you have employees who are W2 employees, then you must file 941 forms every quarter to pay for all the taxes that you are required from the government to hold from their checks. If you collect sales taxes for your services, then Sales Tax reports must be paid quarterly as well. The company should have a separate account that these taxes are held until it is time to make the payment. By keeping the money in a separate account, it will keep you from spending it on other expenses and having to pay penalties for turning the money in late.