Opening a new business is an exciting endeavour that comes with several significant challenges. Financially, a new business involves several details and requirements that cannot be overlooked. As a business owner, having the right resources and tools under your belt will help ensure you’re able to grow your company without running into significant financial hurdles.
With these four important money management tips, you’ll be on your way to a healthy and successful business.
1. Keep Personal and Business Expenses Divided
Combining personal and professional finances is a common mistake small business owners make early on in their venture. While it may seem more straightforward to have a single bank account open, it can lead to complications down the road. With a single account, you run the risk of dipping into your personal funds in order to pay for expenses related to your business. The same goes for joint credit cards.
When starting a business, setting clear financial boundaries between personal and professional expenses will help you maintain healthy habits as your business grows in size and profits. Take the time to set up a business account and credit card with your bank to prevent muddy financial waters between your new expenses and personal finances.
2. Never Skip a Bill Payment
Running a business involves several intricate financial details, and it can feel overwhelming. When invoices or bills arrive, paying them off immediately is essential. Even the odd late fee can add up over time, and creating sound money management habits will only benefit you in the long run.
Since starting a business involves many significant expenses, you may need to look for external assistance to help relieve short-term cash flow issues. Alternative lenders like GoDay are designed to help small business owners, and anyone requiring flexible borrowing, receive the funds they need quickly and efficiently. When it comes to owning a new business, it’s important to explore your options to ensure you’re able to pay your bills on time.
3. Learn to Negotiate with Vendors
If your business requires communicating regularly with vendors or suppliers, fostering a good relationship is essential. Though it doesn’t mean you can’t find savings along the way. Negotiate with your vendors to see where you can both compromise. It may help to shop around before settling with one supplier so that you can get a more accurate picture of the current prices in the market. Additionally, review your purchase terms, which may include payment penalties and grace periods, to identify potential discounts upfront.
4. Understand Your Tax Situation
Businesses are saddled with various tax brackets that may differ from your personal taxes. To avoid any discrepancies, it’s important to understand the type of taxes you’ll need to pay as a business owner and what you’re able to claim as expenses. Income taxes are likely going to apply to your business which means you’ll make payments based on your received revenue. In addition, you may be subjected to employment taxes, excise taxes, or specific state-based taxes. With ample research, you should have the information you need to file your taxes appropriately.