Jumpstarting your own business is often a dream come true for most entrepreneurs. Realizing how critical budgeting and financial planning can be for the business to thrive often comes a bit later.
Planning for your company’s finances is necessary but rarely enjoyable. Many small business owners, particularly those who are just getting started, struggle with it daily.
So, what’s the secret to budgeting? If you’re an entrepreneur starting with a small business, here are some financial budgeting tips and tricks worth keeping in mind.
Add up all your costs
It’s always smart to round up how much you’re spending daily, weekly, or monthly. Rounding it up ahead will ensure that you save more than you need in case you miscalculate or need to account for an unexpected expense.
Hire freelancers instead of full-time employees
Rather than hiring a full-time employee, consider hiring a freelancer or contractor to save on salary costs if you are still starting. You’ll save more money on sourcing, hiring, and training, as well as payroll, taxes, and other expenses. However, if you do decide to employ, make sure you budget for the entire cost. On top of a regular salary, hiring a full-time staff means accounting for training materials, additional equipment, insurance, state and federal taxes, prospective payroll fees, and other expenses. All of this can add up to 30% of a full-time employee’s salary and pay.
Keep your personal and business finances separate
When starting a small business, the first step is to keep it apart from your personal life. First and foremost, this will assist you in creating a budget. You won’t be able to accurately assess how much money your business pulls in—or how much it needs to survive—if your spending is mixed in with your business expenses. You’re one of your company’s most significant expenses. Therefore treat yourself as such.
Furthermore, by having different budgets and credit cards, you will avoid multiple issues in the future.
Put money aside for taxes
This may be a given. Still, many new business owners tend to overlook or undervalue this recurring cost. It would be best to set aside 20% of your gross revenue or 35% of your net income each month for taxes. You will only end up needing to settle more in late penalties if you don’t prepare ahead or disregard tax deadlines. Even worse, you may even face an audit.
Keep track of your receipts
When budgeting, first-time business owners often only consider their significant expenses, but this is a mistake. Small changes compounded over time might have a considerable impact.
So save your receipts and keep precise records to better understand your company’s finances and budget for future growth-related expenses.
Use financial budgeting software like Cloud PCF
Budgeting software not only helps you plan and track your expenses, but you also get added insights on your cash flow and can compare and contrast historical data. Cloud PCF was designed to help business users with no technical expertise. It offers a comprehensive suite of financial budgeting, planning, forecasting, and reporting capabilities so entrepreneurs and business owners can get access to world-class financial software without the need for huge capital investment.
For most new entrepreneurs, budgeting may not be the most thrilling aspect of running a small business. Still, luckily more financial tools are readily available today to help make it easier.
Learn more about Cloud PCF today.