So, you have a great idea. You know this idea could turn into a flourishing business, and you want to do it yourself… but you don’t know how to get started.
Building a small business can be difficult if you’re not a “numbers” person. But that doesn’t mean it’s impossible. Many successful entrepreneurs have brought their ideas to life (and made plenty of money) without a finance degree. By following some basic financial planning tips, you will be able to get your business up and thriving in no time.
Read on for some simple tips that will make the financial aspect of your small business a little easier to manage.
#1 Lock Down Your Funding Plan
There are many ways to start a business. Whether you already have some money tucked away, or you’re starting completely from scratch, it’s important to have a thorough plan for starting this business financially.
- Apply for a Loan – If your credit is good, consider applying for a loan. This route is going to require a detailed budget, along with a plan that proves the possibility of financial success. While this tends to be a more challenging option, with some financial hurdles, it’s certainly not impossible. Give this plan a shot first, and if your loan is denied, don’t worry—there are other ways to secure funding.
- Use Social Media – Social media has made it easier than ever to start your own business. Before you open up your shop, you can garner support via social media. Build up a presence on your preferred platform and raise money through pre-sales and subscriptions. If you gain this online support, it’s easy to transition those followers into customers!
- Raise Money – In 2020, raising money is much less work than it was in the pre-internet days. Sites like GoFundMe, IndieGogo, and Kickstarter are all respectable ways of raising money for your small business. Try making a page, even if you’re not sure who will donate. You may be surprised at how many people are interested in your idea and want to see it come to fruition!
#2 Keep Track of Your Books
Filing taxes for a small business can be tricky. Whether you’re working from home, employ freelancers, or your business simply isn’t bringing in enough income, all these factors and more can trigger a possible audit by the IRS.
You’re going to want to hire a good accountant. Even if you have a small staff, this is a position you don’t want to skip over. With so much on your plate as a new business owner, you’re not going to have time to run all the numbers and keep track of everything down to the decimal point.
Invest in an accountant, keep your paperwork organized, and save yourself the worry of making any mistakes on your own.
#3 Pay Off Debt Over Time
If you do find yourself at the mercy of a dreaded audit, don’t worry, there are things you can do to ensure this isn’t the end of your business. In many cases, money owed to the IRS can be paid off over time. If you find yourself in more debt than your small business can handle, look into arranging an IRS online payment agreement.
This option is available for people who have completed filing all their previous tax returns and owe $25,000 or less. This is a pretty steep number, so if you’re a small business that’s struggling financially, you most likely meet the requirements. Paying off the debt over time is a great way to avoid unnecessary financial pressure that can ultimately destroy your business.
#4 Don’t Skimp on Your Retirement Fund
Chasing your dreams while you’re young is important, but that doesn’t mean you can forget about your future. Don’t sell yourself, or your company short—ensure your small business provides an adequate retirement plan once your CEO years have passed.
Retirement plans vary from business to business, so finding the one that works best for your company is important. Some retirement plans, such as SEP-IRA, are tax-deductible. Other retirement plans, such as a Simple 401k, are optimal for small businesses with less than 100 employees (because a small business with more than that really wouldn’t be a small business).
Do your research about each individual plan, and find what’s best for you. Every small business is different, but it’s important that they all offer security for the future!
Small Business, Big Finances
When it comes to financial planning for your small business, learning the tricks of the trade can sometimes feel like a lot of work. Don’t dive into your new venture without first familiarizing yourself with the basics of entrepreneurship.
Financial troubles and audits can be discouraging, and you want to avoid mistakes that can cause your business to go under. Don’t let the numbers side of things stop you from attaining your dreams.