If you are self employed, organization is so important. When I first started my business, I tracked every penny utilizing an Excel spreadsheet. I wasn't bringing in that much money but the IRS doesn't care so it's important to account for every expense. You need to make sure that you are on top of your business and, most importantly, you need to organize your finances. The problem is, most people don’t have much experience with organizing business finances when they first start out and they find themselves a bit out of their depth. It’s always going to be a bit of a learning curve, but if you follow these simple tips, you can improve your financial organization.
*This is a collaborative post but my authentic perspective and thoughts have been contributed.*
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Dealing with business finances is a lot more complicated than managing personal finances, and there may be some things that you aren't familiar with. For example, tax issues which be really complicated and you can’t afford to make any mistakes, so it’s a good idea to invest in tax training courses (you can find out more about this at https://www.tri-merit.com/tax-training-and-cpe/). It's helpful to learn about the ins and outs of the tax system. It may also be a good idea to take some business courses so you may learn the basics on how to manage your business finances.
Keep All Of Your Records
The biggest mistake that people make when trying to organize their finances is not keeping all of their records. When I first started out, I would store physical receipts inside of an expandable folder so that I could easily find them. If I had an electronic receipt then I made sure to save it to a cloud based system such as Dropbox or Google Drive. When it's time for tax season, you will need to provide receipts to explain various purchases. In addition, when filing a tax return, you need all of your invoices and bank statements etc. It’s also a good idea to get a safe for your house so you can keep all of the important paperwork safe. You need a good organization system with dated folders, so you can easily find the information that you need without searching through a huge pile of papers.
Separate Business Expenses From Personal Ones
Mixing business finances with personal finances is one of the biggest mistakes that people make, and it makes it so much harder to organize your finances. If you start spending money from your business account on personal items, it is not clear how much the business is spending and how much you are spending. This also makes it impossible to budget because, even though you may have accounted for all of your business expenses and made sure that you can afford to cover them. You need to make sure that you have a dedicated business account (visit https://www.moneyunder30.com/best-business-checking-accounts for a list of the best ones) and you never make personal purchases with it, no matter how small.
Build An Emergency Fund
It’s important that you invest money into your business, but you also need to make sure that your personal finances are well organized too. All self employed people need to build an emergency fund that they can use to cover any unexpected expenses. If you don’t have this buffer in place, you could risk your financial organization setup going down the drain when faced with surprise bills.
Organizing your finances when self employed is tough, but if you follow these tips, you will be able to manage your money well or at least prevent making mistakes that could end up being costly.
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Disclaimer: All posts and tips are for educational and informational purposes. SoleOrganizer, LLC is not to be held liable for interpretation of tips and products.