No matter how old you are, the entrepreneurship bug can bite and give you the itch to start a business. If you’ve been working for some time, you probably have some experience in the industry you’re launching into and have spent time in the business world.
However, if you’re younger, there’s more for you to learn. Here are some financial tips that will help you start off on the right foot.
Keep it Separate
Almost every resource about business finance declares loudly and often that you need to keep business and personal funds separate. It’s easy to think that you’ll make sure to track things and know what money belongs to whom, but when everything mixes together, it can be tempting to dip into business funds for personal use.
Besides that possibility, Dmitriy Fomichenko of NerdWallet points out that if the IRS comes calling for an audit, you’ll need proof of business expenses and income. That’s much easier when the money isn’t in the same place.
If your business is a corporation, you’re actually required by law to maintain a separate account for your business.
File Your Taxes
Speaking of the IRS, it’s imperative that you remember to pay your taxes. This might seem like an obvious tip, but your taxes get more complicated when you own a company. Project Eve points out that you might be so wrapped up in day-to-day operations that you forget about taxes, or you might not have the right information to file correctly and meet quarterly deadlines.
If you don’t have an accountant for your business already, it’s important that you seek the advice of a tax professional now to avoid penalties (or jail time) later.
Start a Retirement Plan
When you first start your business, more money will be going out than in. But when funds do start to come back and you have enough to cut yourself a paycheck, Yoav Vilner of Entrepreneur says it’s important to also start a retirement fund.
If another company employed you, retirement plans would probably be part of your intake paperwork and someone else would take care of it. When you’re working on your own, that task falls to you. No matter how much you think you’ll love your business, you will thank yourself in the future for saving now.
Get Ready for Emergencies
You probably insured your business when you opened up, but don’t forget about yourself. NerdWallet points out that, as an entrepreneur, any serious illness or injury can put that source of income in jeopardy.
Make sure that you purchase disability insurance to cover yourself in case the worst should happen. While you’re at it, consider buying business overhead expense insurance. If you have to take an extended leave of absence and that temporarily closes your business, this policy will cover certain business costs like rent, employee salaries or taxes until you’re back on your feet.
If you’re young, driven and ready to start a business, we wish you the best of luck. Just make sure to look both ways before you make a major decision, and consider consulting a financial advisor – like those at Minster Bank.