Posted on Sunday 01 July 2018
As the business world evolves, more and more individuals are deciding to become small business owners. Of course, there are various reasons for this. Some people like the idea of owning an enterprise so they can spend more time with their loves ones.
Others, may be in search of just higher pay and more lucrative, financial opportunities. So they can enjoy life more and even send their kids to better colleges, etc.
Nevertheless, regardless of one's reason for starting a small business, it is quite a big step. One thing we've noticed is there are several commonalities amongst people who try to start a business for themselves.
The ability to take carefully thought out risks, working well with others, and making solid financial decisions. If any one these are not done properly on a consistent basis, it can often make or break a small business.
In fact, many entrepreneurs have failed at their professional endeavours due to a lack of financial knowledge and acumen.
Well . . . that changes right here, right now.
A distinct separation between a small business owner's personal and professional finances is absolutely paramount. According to Fundera , it is a common problem and something most entrepreneurs (Especially new ones) struggle with.
Through the beginning phase of launching a business, many small business owners feel emotionally attached and devoted to what they're building.
Which is great, but your money should be still organized and separated. Organization is one of the key aspects of business. After all, you don't want to lose money and the next thing you know, you are looking for loans (Very common with Canadian entrepreneurs).
However, there are a variety of upsides associated with separating personal and professional finances. First and foremost comes less hassle when it comes time for the business owner to pay taxes.
Subtracting applicable business expenses from owed taxes becomes much more complex when professional finances are intertwined with personal ones. Keeping track of the money which comes and goes each month and documenting any and all expenses will pay off in the long run. Don't worry, you don't have to be as organized as a federal budget.
Moreover, it is simply good business practice. Additional benefits include greater plausibility as an enterprise and absolution from impacts on personal finances in the event of legal issues or other mishaps. More often than not, people think it won't happen to them; nevertheless, unforeseen professional issues arise each and every day.
Another important step for small business owners is for them to find out whether or not they need insurance, as affirmed by The Balance . In some cases, entrepreneurs are required by law to secure insurance for their businesses. For instance, any enterprises which have employees are mandated to also obtain liability insurance and workers compensation insurance.
In life and in business, emergencies and unsuspected occurrences take place. This is why all small business owners should take the liberty of putting aside a reasonable percentage of funds into a savings account.
This money should not be touched, except in cases of absolute necessity. Many entrepreneurs often feel the urge to reinvest earnings and funds back into their business. However, a healthy degree of reinvesting and saving can truly help a business flourish, especially in the beginning.
There are many ups and down which come with being a small business owner. Nevertheless, with the right attitude and application of the preceding advice, entrepreneurs will undoubtedly be setting themselves up for lifelong professional success.