One of the most travelled paths when securing your financial situation is to start a business. It’s a creative way to invest your money and there’s more potential to see your funds grow than simply keeping it stored in a bank account. However, there are a couple of major issues when it comes to managing your own business, and one of the most glaring is the problem of finances.
Accounting is simple when you have a steady job. You pay your taxes and insurance contributions automatically, meaning every penny you get on your paycheck can be spent. You won’t need to worry about self-assessment tax payments and you don’t need to worry about not having enough money to pay the taxman when he comes knocking. However, once you start to earn multiple streams of income or start your own home business, things can get a lot more complicated.
Discipline is important
One of the major issues with managing your own finances is discipline. Since you need to hold onto money to pay off your income tax, you need to practice saving money. If you don’t, then by the time you have to complete a self-assessment and pay your income tax in a lump sum, you might be short a lot of money and, as a result, spend a lot of time paying it off. However, if you’re able to discipline yourself into calculating how much income you have, monitoring your expenses and counting up how much tax you need to pay, then you should have no problem managing your finances.
A brief online course in accounting can do wonders for your home business venture. You’ll learn how to efficiently manage your income, how to record expenses, and the proper way to deal with tax payments. You’ll also learn a lot of tricks on how to visually represent your cash flow using spreadsheets, charts and diagrams. Accounting is a useful skill to have especially when you are just starting up your business, but there are times when you’ll need some support.
When it starts to become a grind
Let’s face it, unless you’ve had some extensive training in accounting and you’re fairly experienced, dealing with your books every week will probably eat up a lot of your time. It’s probably that time of the week where you love getting paid, but simply hate chasing down clients if you’re a freelancer, or realising that you need to spend two to three hours making sure all of your payments are correct and that you’ve put away enough money for tax payments in the future.
Not only does managing multiple revenue streams get tiresome to do, you are also prone to making mistakes if you don’t have finance IT support. There are many programs and outsourced services that can give you a hand with your financial needs. Since bookkeeping is a rather static task, it’s the perfect job for software to take over. Online accounting software is extremely popular among home business owners due to the low subscription cost and flexible set of tools.
However, if you’re going to hire some help to manage your finances, then it’s recommended you pick something a little more flexible such as hiring an accountant to work for you. This can usually be done over the internet with outsourcing. It’s not recommended to actually hire a full-time employee yet because outsourcing an accountant is generally more cost-effective and less stressful to recruit.
Making the switch
However your business is currently going, you probably have plans to grow your company in the near future based on your current success. As a small business that operates from your home, it’s understandable that you want to be frugal in order to save money that can be invested back into your business. However, it’s important to note that you will eventually need to switch gears and start hiring people or outsourcing services in order to grow your company.
The first major hurdle is usually hiring your first employee. If you don’t plan to move to a physical location anytime soon, then you should consider switching to cloud services in order to accommodate remote employees. With the whole internet at your fingertips, it’s not unlikely for you to find the perfect employee you’re looking for and at an affordable price. This is why hiring an accountant is such a major draw to new startups—they’re easy to find, their services are only needed a couple of times a month, and they can be relatively cheap for the amount of time and effort they help you save.
If you’re going to grow your business sometime soon, then managing your finances alone isn’t an option. However, if you’re just starting out, then the frugal option of using a spreadsheet and studying how to manage finances is a good beginning point.