Do you own a home-based business?
If you do, then you likely know how difficult and confusing the financial side of things can get. You have to keep track of everything on your own. If not done properly, you could miss out on tax breaks or cause a big headache down for yourself down the road.
When you own a home business, you get to enjoy the many perks – working from home, being your own boss, setting your schedule, and having the flexibility throughout your day. However, it also requires quite a bit of dedication and motivation, as you won’t have anyone breathing down your neck to get things done.
If you own a home-based business, then we have some money tips to help you stay organized and relaxed so that you can spend more time focusing on the important things – running your business.
Have Records of Everything
Records are essential for home-based businesses. You need to have every transaction you make documented, as well as all of the income you earn each month. Without it, you won’t be able to determine how much you make, and whether or not you’re making more than what it costs you to run the business.
You can either purchase bookkeeping software, hire a bookkeeper, or do it yourself with a spreadsheet. Track things like any expenses and what they are, if you charge tax on your products or services, and what you earn each month.
Routinely Update Your Records
Once you have your records in place, you need to have a routine for updating them. If you let them slide for months at a time, it will take you that much longer to update them.
It’s best to update your records right when something happens. That way, it’s fresh in your mind, and you can get an accurate description of everything.
Keep Personal and Business Finances Separate
Mixing your personal and business finances is never a good idea. Especially when it comes to tax season, it ends up making things quite confusing.
Keep your personal finances separate from your business accounts. That way, you can easily break down the numbers with your business to ensure you’re getting an accurate picture of things.
Keeping finances separate also includes your budgets as well. If you have a personal budget, instead of making an additional section for your business, build a whole new budget. Again, it helps to keep things clear.
Watch Your Utility Bills
When you work from home, your utility bills will increase. That’s because you’ll be using electricity and water throughout the day, compared to when no one is home for eight hours.
Pay attention to how much it increases. At the start, it may take a bit to adjust to the increased bills. When in doubt, there are the options of personal loans from places like Credit Ninja to help pay the additional money, so you don’t fall behind. However, once you’re adjusted, make sure you’re budgeting for the increase.
Properly managing your finances is an essential part of running a home-based business. As an employee somewhere, it’s easy to forget about the behind-the-scenes if you’re not in charge of it. However, when you work from home, you’re in charge of everything.