Need some budgeting tips for the self employed? If you're self employed or run your own business, you will have to pay attention to so many things to help your business grow and enjoy strong revenue. The problem is that when you have your own business to run or you work for yourself, it's usually when you don't have the luxury to appoint a full-time staff to help you. In this situation, it is obvious to face different budgeting issues. It is so because along with working for your business, you will have to do the hard work to collect your paycheck from different sources. As some people pay on time and others don't, it's always a hassle to keep your budget in line. That's when you can consider using the following budgeting tips for the self employed and make things easier.
1. Underestimate Your Income
One of the best budgeting tips for the self employed that you need to understand, especially if you’re still a young business, is that it might take you some time to earn anything that resembles a sustainable income. For new businesses, it's obvious to see some a fluctuation in income – and it may well be quite nerve-racking at times. The best way to handle things during this phase is to underestimate your income and overestimate your expenses. This way, you will always have some cash at the end of each month.
2. Bill Often
It may sound like one of the most common budgeting tips for the self employed, but unfortunately, many people don't make the right move when it comes to billing. Sometimes, you're so busy working on a task that you forget to send out invoices. Remember, if your clients don't receive invoices periodically, they won't pay periodically. Most experts believe that if you're self employed, your biggest cash-flow problem will arise from your billing cycle. Even the best budgeters often overlook the importance of billing regularly and find themselves in trouble. Don't let this happen to you.
3. Keep Some Money Aside for Unexpected Needs
When running a small business, you will occasionally face a slow month or a lean period. It’s important to have a line of credit on hand or an emergency fund to sail through tough times.
4. Think Twice before Purchasing
You need to understand what your business really needs. Sometimes, your business can do without a flashy gadget (like an expensive scanner-fax-copier combo). Make sure your budget can afford it and it will provide value to your business. It shouldn’t just be purchased because it’s the latest must have or it was reduced in price. You want things you will use, not just sit in the corner of the office and look good – i.e. it should be an investment and an asset.
5. Keep Complete Records
All the budgeting advice for the self employed amounts to nothing unless you keep full accounting records. When you first start out, your budget will be based on guesstimates and your business plan. Keep full accounting records and you can keep your budget updated as your business progresses. Of course, you will also need records for tax purposes. They’ll also be useful should you need to raise capital with a loan.
6. Try Bartering
This is another useful piece of budgeting advice for the self employed, but it may not be that simple to execute. The concept is simple – when you offer a specific product or service and want someone else's service, you may want to take advantage of the barter system. If there is a service you can offer in exchange for something you need, offer it as payment.
7. Professional Advice
Going into business for yourself is a big thing, even if you’re starting off very small. The idea of budgeting may leave you cold but it is part and parcel of running a successful business. If you don’t know where to start, there’s no shame in admitting that and seeking out some professional advice. Contact an accountant who can help you draw up a business plan and budget. Having a second pair of eyes may cost you some dollars initially but a third party will also able to provide impartial, realistic and grounded input into your budget process.
I can’t promise that you’ll never have financial issues when you are running your own business, but with these budgeting tips for the self employed, you will have some control over your income. Are you self employed or thinking about becoming a solopreneur?