It is one thing to own a business and another to be successful. While dedication and perseverance are common traits for the most successful solopreneurs, preparation is a crucial part of the strategy. A recent study suggests that 31% of small US business owners spend between $1000 and $5000 on accounting services, while 40% claim costs and taxes are the worst part of running a business. Fortunately, there are ways around this, and below are some tips.
- Manage your expenses
Being a solopreneur could mean combining your personal funds with your business-related expenses. However, this is the last thing you want to do. And it can be time-consuming to go through your personal shopping list or transactions to locate specific business transactions. The best approach is to open a separate bank account for your business. Solopreneurs may require social security numbers to open a business bank account, and the benefits are many. For example, it is easier tracking of business expenses for tax reduction. You can also access a line of credit for covering cash gaps. You will also enjoy liability protection by separating business and personal funds.
- Budgeting is essential
Developing a budget is essential. Juggling several roles can rob solopreneurs of time. However, time is money, and you’re the only one operating your business to bring in cash flow. Developing a budget may not be enough, so it can be useful to do other things to manage your finances. For example, you can eliminate extra costs, reassess your living condition, utilize tax write-offs, and employ automation tools to complement your budget. Solopreneurs may enjoy more freedom than the regular 9-to-5 job. However, starting on the right foot can save you time and money and quickly improve your bottom line.
- Use accounting services
According to the National Small Business Association, one out of three small businesses spends more than 40 hours on state taxes. It’s no surprise that about two-thirds of small businesses use an outside tax professional or accountant to help them with their taxes. For a sole proprietor, there are even more advantages because the expense of employing someone to prepare your business’s tax return is deductible. It can be a smart investment for you to hire experts for your business accounting & tax. The professionals can advise you on finances and expenses to put your business on a successful path with minimal stress.
- Keep all your receipts
Keeping all your receipts doesn’t suggest preserving and filing every receipt you receive after every purchase. You want to keep only business-related expenses. However, it all depends on your type of business. For instance, if you run a home-based business, keeping your business-related receipts can help you claim back some household expenses. It would be best to track and file your expenses, from stamps to stationary and other business expenses, to organize your expenses.
To conclude, your business is more likely to succeed with a solid accounting process. Research has shown that small businesses that review their numbers have better financial health, leading to long-term success.
