Money Management Tips for the Self Employed from Small Business Accountants Melbourne Part 1
There may come a time in your career that you start feeling like you need a change. After years and years of being employed and feeling that you are not in control of your own life may make you feel like you need to regain some control, quit your job and be self-employed. This idea is all good until it comes to a point where you realise you need to manage your own personal finance and your business finance, which may prove to be quite difficult for some.
At m.a.s accountants, the small business accounting services in Melbourne, we realise that being self-employed requires a different financial management. Here are some tips that you should consider if you are planning to be self-employed or if you are already self-employed, from us, the accountants for small business in Melbourne.
1. Always Budget
This is by far the most important part about being self-employed, and if you are just starting to be self-employed, you will need to think about this once, twice, thrice, until you feel absolutely confident with being self-employed. The truth is, money will not start coming in when you are first open for business, which means that you will need to have enough money in the bank to last a few weeks or months before you start seeing any income. Plan your budget well for the next few months, and when you think you have enough then, and only then, you can start being self-employed.
2. Put Some Aside for Taxes
One of the biggest and simplest mistakes that most self-employed individuals do is that they often forget to set some money aside for taxes. Most would use up their earnings without sparing any single dollar, and when the tax office comes in looking for their money, they do not have the money to pay it. It could easily put a large dent on your business and it may knock it out of existence. Therefore always remember to put aside some funds for taxes, and if you still have some left over, you can either save them, use them for your enjoyment, or invest with them!
3. Give Yourself a Salary
Why would I give myself money? It is my money to begin with. Those are what some self-employed individuals may ask and the answer is quite simple, the future of your business. It is very tempting indeed to keep taking money away from your business for your personal enjoyment, However, you may catch yourself in a trap where you end up draining your business out of all investment funds that you cannot grow your business or keep your business running. If you think you can live off $4,000 a month, give yourself that amount every month, and keep the rest in your business for it to grow.
However, we understand that being self-employed also means that time is incredibly limited for you and that you do not have much time to take care of your finances. While we will be back again next week with more money management tips for self-employed people, you could also call m.a.s accountants now for immediate help with your small business accounting. We are the small business accountants in Melbourne, serving the Melbourne CBD and Southbank area.