It takes a lot of guts to be self-employed and try to eke out a living doing what you love. It can be difficult to handle the finances when you don’t have a steady income, but we’re here to tell you the best way to manage money when you’re your own boss.
Getting rid of the nine-to-five corporate job has been a dream long coming and now you’ve realized the dream. Don’t let poor financial planning lead you back to the mundane world of water cooler gossip and backstabbing.
Learn the proper ways to manage your money and you’ll know success in no time.
The Best Way to Manage Money is Through Percentages
When you have a steady paycheck from pay period to pay period, you can say “I’ll put $300 towards this and $50 towards that.” When your income fluctuates from month to month, this isn’t the best way to save money.
One month, your income could be lower than usual, and you’ll end up putting too much money towards savings and not enough for food and bills. Therefore, thinking in terms of percentages is preferable.
You put 20 percent towards your retirement and 10 percent towards savings, etc. This way the amount changes with your fluctuating revenues.
Don’t Rely on Credit Cards
When your income is spotty, especially in the beginning, it’s easy to just put expenses on credit cards with the intent of paying them off the following month. This can be dangerous is you go through a dry spell for income because credit cards have high-interest rates.’
The more money you borrow plus the high-interest rates may make it difficult to make even the mandatory monthly payment. Instead, try to lower expenses instead of relying on credit cards. You could end up in serious debt quickly if you don’t keep an eye on the credit card statements.
Write Everything Down and Keep Good Records
One way to ensure financial failure is to not keep accurate records of day-to-day expenses and customer payments. If you’re business to business, then it can take weeks for a corporation to process and pay invoices.
It’s important to know who has paid and who hasn’t. It’s also important to know when bills are due and when deliveries are expected. Keep a calendar of shipping and deliveries and make sure you bill clients accordingly.
Too many self-employed businesses have lost revenue because they didn’t track when clients paid and when they didn’t.
Keep Track of Employee Paystubs
If you’re a business with employees, then consider a program such as Paystub Creator. Paystubs have essential information not only for employees but employers as well. It shows how much you’ve paid towards state and federal income tax and much more.
Don’t let this fall to the wayside because they’re important documents. They can help you manage your money and provide a reference for any payment issues you may have with employees.
You Can Be Successful and Self-Employed
It can be daunting to take on your own business, but if you can figure out the best way to manage money, then you’ll have no problem. Follow these money management tips, and you’ll be successful.
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