6 Money Management Tips For Your New Business

Starting a new business, How to start a business

Starting a new business is an exciting time, but also a challenging one, particularly as relates to getting the money that you need.

Remember the following tips to help your business get off to the best possible start:

Avoid Over-Borrowing in the Beginning

Any new business needs money to get off the ground. You may need facilities, equipment, materials, supplies, payroll and more. But do the best that you can to get these things without financing too much. Why? Because financing costs money in interest and sacrifices your future profits and cash flow. How do you avoid over-borrowing? As with any purchase, you want to save up before you buy. This means saving enough money to get your business up and running from your own personal savings account.

Analyze the Investment Targets with a Future Perspective

As you consider what investments to make to grow your company be sure that you are thinking both of your financial security today but also about the future. For example, say that you own structured settlements from a previous personal injury case; selling those settlement payments may seem like a good way to get money to invest in your business, and it might be. But weight the pros and cons, considering what benefit you will receive today versus how much difficulty it might add to your future financial situation when those settlement payments are not coming in.

Understand Your Relationship with Your Capital and Funding

Consult a financial advisor or lawyer to be sure that you understand how your own money and credit are on the line with your business; the two of you are very linked early in the life of your business. Start-up money usually comes from the entrepreneur, as does credit, but this means that your personal financial livelihood could be at stake if the company doesn’t turn a profit.

Study up on Taxes and Consult a Tax Advisor

Taxes are one of the biggest expenses of any organization, and one of the least understood. You need to consult a tax advisor to understand where you have to pay sales tax, income tax and other taxes, how they are reported (your own personal taxes or company taxes?), and how the company’s earnings might impact your tax bill at the end of the year. You may also need to be making regular payments to the government to avoid late penalties at the end of the year.

Make Your Invoicing Cost Effective

A penny saved is a penny earned, so if you can save money anywhere you should do it, and invoicing is one area that businesses often overlook. Remember that sending electronic invoices is extremely cost effective and can literally save you thousands of dollars in paper and stamps each year. It also makes it easier (read faster and cheaper) to track and manage those invoices, seeing at a glance what has been paid and what has not.

The best advice you can receive, though, is to hire an accountant. Assuming that your company is not an accounting firm and that you are not an accounting professional, paying a professional to do your taxes, send your invoices and manage your money can free up your time to work on more important things that you do specialize in and save you money in the long run (Gerber, 2004).

Moving Your Business into the Future

With careful planning, critical thinking, and a lot of dedication you can build your new business into something to be proud of and to pass on to your children. Remember to always look for ways to cut costs, make processes more effective, and satisfy your customers and you will do well.

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