Consider paying yourself a smaller salary and taking income elsewhere
One of the perks of owning your own business is the potential for a big paycheck. But it might be smarter from a tax perspective to pay yourself a smaller salary and take income from other means, like drawings or dividends. Talk with your accountants to see which avenue is best.
Keep ALL receipts
A big part of budgeting is estimating taxes and other expenses. One of the best ways to forecast is with real data – so keep track of all receipts (you can log them in your budgeting software for a digital copy). That way you can look at real numbers for your budget categories. It will not only help you forecast, but it’s crucial for staying on track to your budget and filing taxes later.
Automate payments that you’ve budgeted for
If you know the money needs to go out and it’s accounted for in your budget, make it automatic! Talk to your vendors about doing pre-approvals or routine charges. That way you can focus on your business – just be sure to get the receipt every time.
Don’t budget alone
Unless you are a solopreneur with no employees, don’t budget alone. Even then, involve your mentors and advisors to an appropriate extent. Doing it alone means you have a higher likelihood of getting caught in the weeds or not thinking of something else in your business. It’s not an insult – a business is a huge undertaking for one person to think of all the time.
Budgeting isn’t always easy, but knowing how to budget is worth it
When you make a budget, it can feel painful. You’re reducing your whole business or project to a series of expenses. But it’s a necessary process to give you financial clarity – after all, you are in business to make money.
Getting a grip on where your money is going by budgeting will help you set a clean foundation to grow from, financially speaking. Way down the road, too, good budgeting habits will come in handy – if you ever want to expand your business or sell it, clean financials give you the best chance of a good return on investment.
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