If you have just started you’re own business and you’re struggling to get through your first year financially then don’t worry, you’re not alone. Becoming a business owner is an exciting, yet stressful step to take and if you’re not prepared for a year of difficulties in terms of your finances, the likelihood is you won’t make it past the 12-month mark. To help, we have put together a guide showing five ways to save money in your first year of business:
1. Make Sure You Have At Least 6 Months Savings Before You Start
When you first decided to start your own business or enter into the freelance world, it’s important that you have enough savings to last you at least six months. You never know what will happen during the first few months so you need to be sure you still have a way to pay all of your bills and outgoings. The more you can save the better, but six months is definitely a good starting point.
2. Only Purchase the Essentials or Things You Know Will Bring You ROI
When you first start your business it is tempting to start purchasing absolutely everything you believe will help your business grow. The best thing to do is do as much research as you can into what it is you want to buy, wait 30 days, then if you still want to purchase it afterwards you know it’s a good decision. If you are unsure on anything, consider talking to those around you that may be able to help.
3. Make Sure You Are Putting Away Enough For To Pay Your Taxes
One of the things people often forget is that when you are running your own business, you need to pay your own taxes. The best way to avoid high taxes at the end of each year is by putting away at least 20% of everything you earn each month. Keeping this money behind will mean you are well prepared when it comes to paying your bill. If you are lucky, you may even find you have saved more than you need to. Thankfully there is something known as tax relief help, and you can delve deeper into this as you look at your finances.
You can certainly also look into better ways to save on taxes as you go along. One tip is increasing some costs to save on taxes. While this is a rather strange concept, the brief explanation is most business expenses can lessen your taxable income. When your taxable income is lower, your tax liability decreases, too. However, this tip should be practiced with caution. It is not a license to go on spending spree as each expense still affects your bottom line. It is usually applicable for capital expenditures that will equate depreciation expenses to tax savings.
It’s important that you always pay your taxes on time to avoid late payment penalties and interests. The government will charge you interest for any unpaid balance compounded daily until your balance is paid in full. Additionally, you will also be charged a failure-to-pay penalty every month that the tax remains unpaid. Therefore, always take note of tax due dates and have the money ready on time.
4. Sign Up For a Company Credit Card
If you think your first 12 months are going to be difficult in terms of financial aid, you may want to sign up for a company credit card for use in emergencies. Whilst it is not encouraged you use it for every purchase, it is a great way to cover any costs incurred whilst waiting for people to pay their invoices. For more information, you can visit credit card guru.
5. Invest In Learning Something New That Will Benefit You
If you think you are going to spend your first few months trying to get to grips with running your own business, investing in a course may be incredibly beneficial. Here are many affordable courses out there that can teach you how to run a business, how to manage your finances or how to use social media to smash your first year. No matter what it is you think you need to improve, there will be a course for it.
Are you in your first year of business and struggling to make ends meet? What can you change within your business structure? Let me know in the comments section below.