These seven financial practices will benefit small business owners with a new perspective to help them better prepare for the future, without sacrificing their relationships with customers, the arts, or the team.
Get acquainted (gain, obtain) with present-day financial practices.
The first two practices lay the foundation for openness to financial information.
1. Regular financial review - 69% of small business owners do this.
All businesses have environmental degradation and flow, the pattern of income rhythm, and cost. Sometimes it is because of the season. Sometimes it is because of project time and contract conditions. In any case, a weekly or monthly financial review is a task to understand the frequency and severity of your business and how your business can grow or be at risk due to late-paying customers.
2. Save the budget - 47% of small business owners do this.
The anticipated budget is for business outcomes. For beginners, make a budget on the first day of the month to determine how much you will earn that month and how much you will pay for it. Then review the budget against the actual results at the end of the month. Clean and repeat. You will get better at budgeting. And as a result of budgeting, you will make more informed decisions and identify potential problems before they occur.
Pay government, lenders, and you.
The following three practices improve financial management discipline. The dollar is not a profit dollar - and ignoring the idea could dig a hole 10 feet deep with your business.
3. Keep the right amount of tax - 52% of small businesses do this.
The tax money you put aside is not really your money. That’s why it’s best to keep it aside immediately and not get confused with your remaining business income. With government taxes, the secure port law is your friend. Set aside at least 90 percent of your taxes for the past year, and you will not be penalized. The common heuristic is that 30 cents on every dollar you get from your customers owe the government.
4. Firmly reduce debt - 50 percent of small businesses do this.
Sometimes debt is good. You take out a short-term loan to empower the health and long-term growth of your business. However, unnecessary debt drains your business. And most importantly, if you have a business loan, it is important that you make consistent payments, and significantly reduce the principal amount.
5. Pay yourself a living wage - 49% of small businesses do this.
The word "salary" may not apply to your business. You do not need to send money every month. Instead, you can withdraw money from your business account from time to time to set aside the money you earn. When you pay for it, you are forced to think about your business and your income separately
Prepare for business formation and tax planning.
The last two practices address legal and tax considerations for the future of your business. You can't avoid debt and taxes but there is a good way for your business to reduce risk and put more money in your pocket
6. Establish a comprehensive business and credit business framework - 64% of small businesses do this.
General business units are sole proprietors, partnerships, and companies. Each building has different legal and tax requirements. While many self-employed professionals choose to invest, a company may not be the best structure for your business. If you are not sure which building is right for your business, you may want to seek professional advice because of the costs involved in changing and maintaining a business building.
7. Increase tax cuts and reductions - 65% of small businesses do this.
Take advantage of every tax advantage your business has. If you don't, it's a scam on your business. Withdrawals and deductions reduce your tax-free income and therefore reduce the amount you pay to the government. I know from talking to many small business owners that tax planning may sound like "playing the system," but it's important to remember that it's completely legal and accepted by all big business. If you are new to the game, you may want to seek out a tax professional as a future investment for your business.
There are more than 20 million small business owners in the United States who have not yet followed all seven financial practices of the most successful business owners.
In addition, approximately 1 in 2 small business owners engage in any financial practice. This means that no habits are too difficult. The challenge is to raise awareness and ethics that are important in these financial practices.
Based on the success of many other small businesses, adopting these practices will lead to better business outcomes and greater satisfaction with the job you have chosen. Whenever you are caught, seek help from a Business consulting Services provider and they will help you out. Talk to accountants, accountants, attorneys, tax professionals, and software providers to assist you on your journey. Use this list to make sure you stay focused on practices that lead to better business results.