This post is another in my series on tips for entrepreneurs.
Whether you’re thinking of starting a side-hustle or simply want to start working for yourself, becoming an entrepreneur means making sure you have your finances in order. New entrepreneurs often fail to treat their business as a separate entity, which can lead to debt, tax issues and financial complications. Here are some mistakes you should avoid when becoming an entrepreneur.
Putting everything into the same account
Before even starting to receive money from your customers, have a separate checking, savings and credit card accounts for your business and your personal life. Not only will this make all the accounting much easier but it will help with future planning and budgeting. Having separate accounts will also help you understand the overall financial health of your business, allowing you distinguish clearly the cash flow between your spending habits and the ones of the business.
Getting into credit card debt
Even if you are expecting to make grand returns in the future, it is always wise to not get into credit card debt. Manage your expenses so you never fall into the credit card trap (get helped at fixmy.credit). Since they are easy to use, most people forget about the compounding expenses and don’t repay. If you need extra funding, take a look at business loans or government funding, I used to ask myself how do I get a loan all the time and then I found pickaloan.co.uk who were very helpful. However, be careful where you decide to get your money, because as AAA Credit Guide (https://www.crediful.com/credible-com-review/) says, everyone claims to be offering ‘expert advice’, when in reality they are just using marketing tactics to draw more clients in.
Not planning for rainy days
A big mistake new entrepreneurs make is not saving enough for emergencies and difficult times. The minute your business starts making a profit, you should start saving for possible harder times in the future. Using a credit card will create more problems than solutions, so make sure you keep several months of expenses somewhere safe for when you’ll really need them.
Not having a budget
The finance side of businesses is all about spending and earning money, and budgets are what will allow you to calculate roughly how much you can do of each. This is essential for planning and understanding how much money your business needs to work and expand. Have a budget for each department of your business, and stick to it. This will foster a financial self-discipline which will help you for bigger decisions in the future.
Becoming an entrepreneur will give you freedom and independence you didn’t even know possible. But it comes with certain financial risks which need to be well assessed before making decisions. By taking into account these four common mistakes, you business is more likely to succeed and make a profit.
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