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Tips to Remember When Starting a Small Business

Tips to Remember When Starting a Small Business

There are few things as exciting as starting your own small business. Whether it be a lifelong dream or something you just recently started considering with the extra time you’ve had during the pandemic, a startup has the potential to truly change your life. However, all the good intentions you have will need solid financial planning to back them up to ensure the company can stay in business. Here are some financial tips you need to keep in mind.

Invest in The Future

While it is important for a business to save money where it can and put some of that savings in the bank, it is also important to invest in the future of the company. It is impossible for a company to grow without some of the profits being reinvested in expansion opportunities. Talk to your financial advisor about what an appropriate percentage should be as this can vary depending on the industry.

These investments could include more inventory or higher-quality inventory, technological improvements, real estate acquisitions, or improved employee training. No matter what the improvements are, it will show that you are serious about your business and willing to add value to it.

Getting Your Personal Finances in Order

Many would agree that shoring up your personal financial situation is imperative before starting a business. If you’re in over your head and need to pay costly credit card balances or miscellaneous debt, it is advised to take out a personal loan to pay off your financial burden. It is also a good idea to compare terms and interest rates when applying for personal loans as well as how long it takes to be approved. Some companies can deliver an answer in as little as 60 seconds. After paying these debts off, take a look at your monthly expenses and see where they can be reduced. There are many times when you may be spending money on things that can be very easily done away with. By ensuring your personal finances are taken care of, it will be far less stressful when it is time to open your business.

Analyze Tax Payments

While it may be very easy for an established business to save for their quarterly tax payment, it can be an altogether different story for a young startup business. It may be better to pay the tax bill monthly instead of quarterly. By doing it this way, you can treat the bill as if it were any other monthly bill. You also avoid the bill growing to a level that may be unmanageable.

Read Your Own Books

It may seem practical, and in many cases, it is, to hire a bookkeeper to keep track of the finances of your company, but you also need to know how to read them yourself. Failure to know how to read your books can set your business up for embezzlement or errors which may put you in jeopardy with the government. When the eyes of a trained bookkeeper, as well as the owner, are looking at the finances, it could mean greater monetary security.

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by Dirk DeBie // Contributor to Businessing Magazine.

Opinions expressed by contributors are their own.