6 Financial Tips for Entrepreneurs
by Ashley Feinstein, Contributing Writer
Article Sponsored by: NC Department of Public Safety
4. Get tax advice.
It’s important to get professional tax advice so you can minimize your tax bill and prepare accordingly. If you are on a payroll, taxes are automatically deducted from your paycheck, but if you are earning revenue from your own business, you’ll want to put a certain percentage of money aside to pay your tax bill at the end of each year. You do not want a huge unexpected tax bill to stress or even bankrupt your business during tax season. Find a tax professional you trust and check in each quarter to estimate your projected tax bill for the last few months. The more you plan, the more you’ll be prepared and won’t run into any unwanted surprises. Having your personal expenses separate from your business expenses will make meetings with your tax professional a whole lot easier and less time consuming.
Many entrepreneurs sacrifice their own financial health for the sake of their businesses. Make sure to protect you and your business with the right types of insurance. You will want to have health insurance to take care of your medical and health needs, disability insurance in case you are unable to work for a short or long period of time, and life insurance if you have people who depend on you for their financial well being. You will also want to make sure you have the right business insurance, which will depend on your industry and the type of business you have. Business insurance will protect you from unnecessary liability from your day-to-day business operations. Talk to an insurance professional to get advice on the best type of insurance for you.
6. Pay yourself first.
Paying ourselves is another area where entrepreneurs struggle because often so much of what we make gets invested back into the business. At the end of the day, running a business is a job that you are doing so you can make money. If you don’t pay yourself first and protect your financial future, no one else will do it for you. Take the time to set up the correct retirement options for you and your employees. Depending on your company structure, you can set up a SEP IRA (Simplified Employee Pension Individual Retirement Arrangement), 401(k), Simple IRA (Individual Retirement Account) or defined benefit plan. Once you choose the correct structure for you, put it to work. Set up automatic contributions so you are paying yourself each month. If it seems overwhelming, start small. You can contribute as little as 1 percent of your income and slowly work up from there. Some plans will increase your contributions automatically by whatever you choose over a specified period of time. If you increase your contribution percentage every month by 1 percent, you’ll be contributing 12 percent by the end of the first year and may hardly notice a change!
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