Many home-based professionals own their own businesses. Whether your business is a lawn care and snow removal operation, a freelance web design service, or something else entirely, if you own and operate your own business there is a good chance that you are responsible for the financial affairs of your business. While you can choose to outsource this work to a small business accounting firm, that costs money and it may be more than you are willing or able to pay. Do not despair, though, you are capable of learning how to take care of your business’s financial affairs. Here are a few basics to get you started.
One thing that is certain no matter what kind of business you have is that you need a budget. Even if money comes in to your business at irregular intervals, such as with a freelance or other project-based business, it is essential that you make a budget. At its most basic level, a budget is an estimation of the costs that you expect to pay and the income that you expect to receive through your business each month. Throughout the month, write down every transaction, no matter how small the amount. Detailed record keeping is the only way to truly know where all the money goes. At the end of each month, compare your budget (the estimates) to the actual amounts of money that came into and went out of your business that month and adjust your budget for the next month to keep it as accurate as possible.
Your budget can help you to catch potential financial issues before they become big problems. For example, if you are making your budget for next month and you realize that there are not many payments scheduled to come in, you can do a few things to avoid a cash crunch. First, you can look at your anticipated expenses and see if there are any places that you can cut costs. Next, you can direct some energy towards finding more work. Some ways to do this are contacting prospective clients, adding some new information to your web page, and offering specials to existing clients. You may be able to get some small projects that you can complete quickly to generate the cash that you need.
These are just a few budgeting basics for home-based professionals. What are your favorite tips and strategies for handling the business finances?
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