Important Money Management Tips for the Self-Employed

Important Money Management Tips for the Self-Employed

Those who are self-employed need as many tips as possible for managing their money. The more effective you are at doing this, the more successful your business will be. In fact, one of the most common reasons that self-employed people fail miserably is because improper money management. In this article you will learn some useful tips for keeping your finances in top shape. If you want your business to be truly successful, this is one thing you cannot neglect.

Create a Budget

Everyone who runs their own business needs to have a clear budget established from the start. Take some time to write down all of your business expenses so you know exactly how much you spend on a regular basis. Remember to track your spending on a regular basis so that your finances don’t become disorganized. This will help you know whether or not you should start cutting back on your spending.

Take Care of Your Tax Obligations

All self-employed people in the UK need to pay National Insurance on their income as well as tax. In order to figure out exactly how much you owe, you will need to have detailed records of all your incoming and outgoing expenses. Take as much time as you need to go through these records so that you will have a clear picture of what you owe. The last thing you want to do is to make a mistake, because it could end up costing you your entire business.

Make Your Bills Priority Number One

Anyone who owns a business needs to make paying their bills the top priority. Those who neglect even seemingly minor bills can experience big problems in the near future. Make sure that all of these expenses are taken care of on time. The farther you get behind with any of your bills, the harder it will be to catch up. If you are having problems with paying your bills, you can seek help from the National Debtline or Citizens Advice. These are both very helpful resources for self-employed individuals who are struggling financially. The worst possible thing you can do is to simply ignore your bills for any period of time.

Treat Yourself like an Employee

You should make a point of treating yourself like any of your employees, at least when it comes to salary. You might make more than the people who work with you, but it’s still important to give yourself a set amount. Not all of the money you make goes to you, which is why it’s good to have this mindset. By doing this you will be able to minimize the temptation to take more for yourself than you should out of your profits.

Plan for Retirements

Even those who are self-employed need to start thinking about their retirement. The standard State Pension most likely won’t be adequate, so you have to examine some of your other options. You could be able to make National Insurance contributions to beef up your current State Pension. The sooner you start thinking about retirement, the more likely you are to be prepared.

Establish an Emergency Fund

It’s also important that self-employed people have an emergency fund just in case. You want to know that you have some money put away if an important expense suddenly arises. You should try to put away a little bit of the money you give yourself each week. Eventually you will have a nice-sized fund for taking care of important emergency expenses.

Limit Your Credit Card Use

You should try to limit your credit card use as much as possible, as it can quickly get you into big trouble. Those who use their credit cards to pay for business expenses on a regular basis can end up debt in debt very fast. If you ever use your card to pay for something, it should be important. Make sure that you can pay off whatever you spend on time. It is important to clear the balance on your account so that you don’t end up owing more than you need to. Often, a loan, even if you have bad credit can be much better than using a credit card.

Use Computer Software

The right computer software can go a long way towards helping you to manage your finances effectively. You should spend some time looking for a good program for budgeting so you can stay on track financially without doing more work than necessary. These days software can help you with a lot of aspects of your business, including finances. While you shouldn’t rely entirely on it, there is nothing wrong with utilizing it for some things.

Hire a Good Accountant

If you are not going to manage your own books, you should focus on getting someone very skilled and experienced. The person you choose for this job can help keep your business on track or drive it into the ground, so make sure you choose carefully.

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