So you’ve decided to invest in yourself, your future, and your happiness and start your own business.
You’ve joined the ranks of 15 million workers in the United States who are making money by working for themselves. It’s an endeavor that can bring about an amazing sense of accomplishment and freedom — but along with that comes a good amount of responsibility. Nowhere is this more apparent than when it comes to handling your finances.
If you’re making money by running your own business, you’re going to need to consider how much you’ll end up owing Uncle Sam. Even if you’re only making $1,000 a month by running a cooking blog out of your kitchen, you’re going to need to pay the government something in taxes.
Bookkeeping is really just doing a solid job at tracking your financial status, namely how much your spend and how much you bring in. Depending on the size of your business, you may want a freelance bookkeeper to help you out. Here you can find people who can help you out with a wide array of accounting needs, from sorting expenses into an Excel file to preparing financial statements for professional purposes.
Of course, it’s wise to have have a trusted tax advisor on hand who can help you figure out your deductions, what you owe, and even how often you should be paying taxes.
Make it Make Sense
One of the most important financial steps you’ll take when establishing the business of you is deciding how much to charge for your services.
First off, you’ll want to figure out any costs associated with the materials you use for your business. For instance, if you’ve decided you’re going to start selling homemade candies out of your dining room, you’ll need to figure out the cost of the ingredients and packaging. Then you can start to think about how much you’d sell your candy for in order to turn a profit.
But there are other costs associated with running a business. For instance, if you deliver your candies, you’re going to want to factor in gasoline costs, wear on your car, and maybe even added insurance costs since you’re technically using your personal vehicle for business purposes. If you’re selling your candies online, you need to factor in any shipping costs.
You also need to think about how much your time is worth, while also considering where you are in your career. To use the homemade candy example again, is this your first endeavor making homemade candies? If so, you probably can’t charge a premium price without showing the world that you know what you’re doing. Conversely, if you run a successful restaurant and are now looking to sell homemade candy online, your reputation may allow you to charge a bit more for your goods.
Also, don’t forget to look around at similar products and services and figure out how much other people are charging. See what is considered a fair price in your industry and let that be your guide. The last thing you want is to look like you’re completely out of step with others who have similar offerings.
Don’t Forget the Helping Hands
Sure, we’re talking about “the business of you,” but you will almost certainly need to hire people to help you accomplish your goal. For instance, you may need to hire a part-time delivery driver to deliver your goods, or a graphic designer to help you create a logo. Decide how much you want to spend on things like these before you go looking for someone to help you out. If your budget allows you to spend $300 for a new logo, stay within that in. But then again, don’t be afraid to spend a bit more if you think you’re getting a spectacular deal.
In the end, the success of your business depends on your financial intelligence and your ability to keep track of how much you’re spending and how much you’re bringing in. Just keep in mind that you aren’t going to get rich overnight. Depending on your business, it might take you months or even years to start making enough money to make this whole adventure seem like a good idea.
Covering yourself financially is only the beginning running a successful business. Our next post will look at legal issues and precautions every small business owner should keep in mind.