Let’s Talk "Biz" Finance

Managing and staying on top of your business finances is crucial to reducing stress, boosting income, and making clear decisions. I’m sharing several weekly, monthly, and yearly strategies I use to ensure tax season is a breeze!

As a business owner, managing the financial side of my business is crucial for smooth operations and long-term success. It’s not always fun, but NOT doing it would be even less fun. 😅 And to be honest, sometimes the nerdier side of me enjoys a little number crunching…

Here are some strategies I use every week, month, and year to stay on top of my finances and ensure a stress-free tax season:

Weekly Strategies:

Vehicle Expenses

I purchased my vehicle under my business name. This allows me to write off gas, oil changes, repairs, and car payments as business expenses. If you use your car for at least 50% business purposes, you may be eligible for this too. Always consult with your accountant to confirm!

Mileage Tracking

I use the app MileIQ to track my mileage. It distinguishes between personal and business trips, and provides a detailed report each month that I can send off to my accountant without having to manually track it all year long.

Monthly Strategies:

Budgeting and Profit/Loss Tracking

Every month, I update my budget and profit/loss spreadsheet. This includes my income, expenses, and payroll. I use an excellent spreadsheet from Elizabeth McCravy that helps me track my actual profit and compare it to the previous year. This tool is invaluable for gaining insights and making informed decisions. If this is something too complex to do on your own or you don't want to do it, hiring a bookkeeper is where it's at! My income streams and expenses are simple enough that I don't feel the need to do this yet.

Evaluate your Finances

I analyze my expenses monthly to identify areas where I can cut costs. This involves evaluating the software and services I pay for and determining their necessity. Reducing overhead is a priority to keep my business maximizing profits. I don't cut costs unnecessarily, I spend money where it has value, but I also check myself on my subscriptions and purchases to make sure I'm truly getting value out of them.

Tax Savings

I move 25% of my profit into a high-yield savings account each month. This helps me earn interest on my tax savings and ensures I have enough funds when tax time comes. I prefer to pay taxes annually instead of quarterly to maximize the interest earned. Although I pay a small tax penalty for this, the high yield savings account earns me more money. And, I only have to make a tax payment once a year vs. four. Win-win.

Yearly Strategies:

Tax Preparation

At the end of the year, preparing for tax season is straightforward. I compile a few files and send them to my accountant, making the process quicker and more stress-free than if I was to push this off until tax season.

Emergency Fund

I currently maintain a six-month but am working towards a one-year emergency fund for my business. This will help me cover expenses during slow periods or unexpected situations. If I lose a client or don't book the amount of projects I need to in a quarter, I'm not freaking out; I can still run my biz with a level head. Most financial experts recommend at least 3-6 months worth of expenses in your emergency fund. Having this cushion reduces the stress of running a business and provides financial security! 

Additional things I’m currently doing:

• I avoid giving myself a raise to minimize tax liability and keep more funds in my emergency savings. 

• I consistently review my finances to help identify trends and make adjustments as needed!

These simple practices truly help me manage it all without feeling stressed.

As always, I am here to make owning a business that much easier! From website design, branding, graphics + photography, to social media - I am your girl! Let's connect!