Managing Money When You’re Self-Employed: A Four Step Plan

If you have looked at the pros and cons of working for yourself and going into a home-based business, then you need to look at developing a plan. You need your business to define you and lead you to where you want to be. Having a plan can also help you to assess your personal finances and what money you will or won’t need. And unfortunately, there are plenty of statistics out there that show how much home-based businesses fail, simply because they have not been planned out well enough (particularly when it comes to finances). So if you’re thinking that this might be the next step for you, then there are so ways to make being self-employed work for you.

Keep Accurate Records

There is no payroll department when it comes to working for yourself. You are the person that will be keeping the records and checking how much taxes you owe. And if you don’t stay on top of it, it can take over and lead to a surprise bill at the end of the financial year. So look for something like a check stub maker to use each month, so you can figure out what taxes you need to set aside and pay. You should also keep copies of invoices, payments, and other expenses that you might have. Even things like business cards can be good to file as you may need them to network with later down the line.

Avoid Credit Cards

If you plan to go into self-employment thinking that you’ll just rely on credit cards, then you need to think again. This shouldn’t be the attitude to go on with at all. You need to think about being paid interest with you cash, rather than paying interest on credit cards. Budgeting well is the best way to avoid this.

Track Your Income

When you are self-employed, the income that you get from month to month can vary. Some work can be seasonal, and some months just much slower with clients being stricter with their budget, for instance. So it is a good idea to track every penny that you get paid and where it goes. When you earn more than normal, make sure you have a good savings account or investment to put the money into. Then you can draw on it during the months that are quieter.

Don’t Underestimate Expenses

You can easily just guess at what you will need to get your home-based business started, even if all you need is a new laptop and internet connection. But the thing is, there are many other expenses when it comes with running a business. Things like insurance, bills, apps, childcare, and travel can all add up. So allow for this when you are planning your finances and the budget for the business.

There are many examples to follow online, so don’t feel like you need to reinvent the wheel. Just take your time, plan, and set your budget accordingly, in order to have financial success.