Everyday we wake up and go to the office to earn a paycheck. Whether it’s a paycheck as an employee or a paycheck as the owner of our own company. Our goal is to make income/money so that we can support our families. And maybe even a little entertainment as well. All work and no play makes for a dull day, right?
But you need to monitor your money closely and make sure that it’s S.M.A.R.T. Let me tell you what I mean.
Separate accounts. Be sure that you are maintaining a proper separation of bank accounts. Of course I mean personal from business, but you can also create separate accounts within your business. Most companies have an operating checking account along with a payroll account. Some even have an operating checking account along with a savings account. Well I say, why not have all three…or even more. Having separate bank accounts for major areas in your business will help you manage your finances better.
Maintain good records. Make sure that you are using an accounting software to record your transactions. Living out of a shoebox won’t cut it. If you are not paying close attention to when and where your money is coming from and going, you have no idea how much money you really have to operate ongoing business matters.
Analyze your costs. Periodically you need to be conducting a cost analysis of your expenses to be certain that you don’t have any money leaks in your business. Minimally you should do this on a quarterly basis so that you can prepare and plan for the succeeding quarters.
Reserve for taxes. There are few things your HAVE to do in life, paying your taxes is one of them! Make sure that when you are managing your payables that you set aside a percentage for your income taxes. At a minimum you should be paying enough to cover the exact amount you paid in the previous year. If you need help see a tax professional.
Take your cut first. In conjunction with ‘S’ above, develop a savings. As a business owner you should be setting aside a reserve in the event that you are in a bind because a customer’s payment bounced or because you never received it. No it doesn’t have to be this extreme. You could be saving to upgrade your computers. The fact is, you need to be saving. So pay yourself/company first by putting away a certain percentage of every payment you receive.
How S.M.A.R.T is your money?
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