225: Personal And Business Financial Stability Whether You Are Starting A Business Or Side Hustle, A Solopreneur, Entrepreneur, Mompreneur, Freelancer, Bookkeeper, Virtual Assistant, Business Owner
225: Personal And Business Financial Stability Whether You Are Starting A Business Or Side Hustle, A Solopreneur, Entrepreneur, Mompreneur, Freelancer, Bookkeeper, Virtual Assistant, Business Owner, Or Self-Employed
Understanding and having control of your personal finances is extremely important when you have a business. There may be instances in your business when you need to inject personal funds into the business if you are having issues with your business meeting its cash flow and financial needs. You need to know if you can indeed afford to put these funds into the business without negatively impacting your personal finances. On the flip side, you also need to know how much money you need the business to pay you so that you can continue to meet all your personal financial obligations. When you have a clear understanding of your personal finances as well as how your personal finances may impact your business, you can be proactive with your finances so that you can benefit your business in the best ways possible. In today’s podcast episode, I discuss how your personal finances can impact your business. As a business owner, there are many times that your personal finances, credit score, and even personal guarantees are taken into consideration. Knowing your finances and being prepared for the future could help you ensure your business is set up for success rather than the high failure rates we see in many business startups. Whether you are a self-employed individual, a solopreneur, entrepreneur, mompreneur, freelancer, small business owner, a remote, virtual, online, or in-house bookkeeper, or a virtual assistant or VA, make sure you are aware of how your personal finances could impact your business. These tips are essential whether you are using a computerized software system like QuickBooks, Xero, Wave, or FreshBooks for your business finances; or doing your bookkeeping manually with an Excel spreadsheet or even a Google Document…
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Show Notes:
Understanding and having control of your personal finances is extremely important when you have a business. There may be instances in your business when you need to inject personal funds into the business if you are having issues with your business meeting its cash flow and financial needs. You need to know if you can indeed afford to put these funds into the business without negatively impacting your personal finances. On the flip side, you also need to know how much money you need the business to pay you so that you can continue to meet all your personal financial obligations. When you have a clear understanding of your personal finances as well as how your personal finances may impact your business, you can be proactive with your finances so that you can benefit your business in the best ways possible. In today’s podcast episode, I discuss how your personal finances can impact your business. As a business owner, there are many times that your personal finances, credit score, and even personal guarantees are taken into consideration. Knowing your finances and being prepared for the future could help you ensure your business is set up for success rather than the high failure rates we see in many business startups. Whether you are a self-employed individual, a solopreneur, entrepreneur, mompreneur, freelancer, small business owner, a remote, virtual, online, or in-house bookkeeper, or a virtual assistant or VA, make sure you are aware of how your personal finances could impact your business. These tips are essential whether you are using a computerized software system like QuickBooks, Xero, Wave, or FreshBooks for your business finances; or doing your bookkeeping manually with an Excel spreadsheet or even a Google Document…
Welcome Back…Having your personal finances under control when you have your own business is extremely important. Not only should you have a system for managing your personal finances, but you should also understand how your personal finances can impact your business finances as well.
Let’s start with how you can make sure you are managing your personal finances effectively. You should be consistently tracking all your money coming in and going out of your personal finances. This will give you a good idea about how much money you are making as well as how much money you are spending. You’ll see any fluctuation you have in your income and expenses, and you should try to track this on a monthly basis. Once you have a good idea of where your money is going, you can decide if you are happy with these amounts. Often when you really start looking into each of the amounts you are spending, you become more aware and may decide to adjust your spending in different areas. Take, for example, you start tracking how much money you are spending on eating out. When you see a total for this at the end of the month, you may be surprised and decide to limit your eating out a little more in the future. Having your monthly amounts will also help you to create a budget. Does the thought of creating a budget make you squirm a little bit? If so, I want you to know that this doesn’t have to be complicated. All you need to do is take the amounts you find when you are tracking your finances and then tweak these amounts if you feel they are necessary. If you think they are okay, then you have budget numbers you can work with already. Having a budget will help you follow through with your plans and really allow you to start working towards your financial goals. Make sure when you create your budget that it is realistic so that you can stick with it. You don’t want to create a budget that is so strict that you consistently go over budget and feel out of control. You also want to ensure that you have an emergency fund set up. I would recommend that you aim to have 3 to 6 months of expenses saved up; I know for many of you, this may seem like it is unobtainable when in fact, it is obtainable. You just need to start small and then keep building on it. Make a goal of starting with a smaller amount…maybe $250, and then going to $500 and so on. If possible, I would also recommend trying to budget in an amount that you will save on a weekly or monthly basis and have that amount automatically transferred to your emergency fund. By doing this, you are making saving money effortless. I also want you to make sure that you are paying your bills on time. Again, if it’s possible to set up automatic payments for your bills, it will save you time and help limit late payments. If you are good at paying your credit card in full, you could set up your bill payments to be paid by your credit card and then have your credit card set up to automatically be paid in full by the due date as well. This will not only help you pay your bills on time, but it will also help you incur cash back or rewards if your credit card allows for this. If you need to cut back on your expenses so that you are able to save more money or pay off debt, make sure you are monitoring your expenses and stop any that are unnecessary or you are not utilizing, and have a plan for paying off your debt. Find out what the interest rates are on each of your debts and decide if you will work at paying off your highest interest debts first so that you can save the most money, or if you’d rather pay off your debts that have the lowest overall total so that you can gain some momentum by paying one in full, and have fewer debts outstanding, and then moving on to the next lowest debt balance. If you anticipate any large purchases, include them in your budget and save for them whenever possible. And lastly, make sure you are investing and have a plan for your retirement. Whenever possible, take advantage of retirement plans that have a tax break. You could look into a 401K, Simple plan, IRA, or even a Roth. I also recommend that you take some time to review your personal finances often. Book a time in your calendar when you’ll go over everything finance related and make it a priority. Do not cancel these appointments. This would be a great time to review your credit score as well. Review your spending, budget, and savings goals and set new ones once you’ve achieved them. Make it fun and pamper yourself a little or make it special when you do this so that you will look forward to doing it again in the future. Having all of your personal financial information will allow you to create your own personal financial statement, which lists all of your personal assets and liabilities. This personal financial statement will help you to see exactly how you are sitting financially. When you have your personal finances in control, you will feel more at ease and will be able to make better decisions for both your personal finances as well as your business. Understanding your business finances will be much smoother as well.
Now that you have an idea about how to manage your personal finances, let’s take a look at how these personal finances can impact your business. If you are just starting your business, you may be looking at utilizing your personal finances to get your business started. You could be using your personal savings, personal income, or your personal assets when you do this. Have a business plan in place so that you know how long it will take for your business to generate consistent income. You may need to continue to inject personal funds into your business at first if your business isn’t making enough money to be sustainable. Know where these funds will come from. Do you have a personal savings account you can fall back on, or will you continue to work at a job until you can afford to rely solely on your business income? You’ll also need to have enough income to cover your personal bills and living expenses during this time as well. Make sure that you have separate business and personal accounts. This will help you to not only keep your personal and business finances separate but it will also make it much easier to know exactly where you are sitting in each area. When you commingle your business and personal finances, you are not only looking at some potential legal issues, but when you keep them separate, you can truly see how your business is doing financially with an accurate picture of your financial statements. It also makes doing the bookkeeping for your business much easier since you are only accounting for the actual business transactions. Keep your finances separate even if you are a solopreneur and you are a sole proprietor filing a Schedule C on your personal tax return.
If you are looking at obtaining a loan for your business, lenders may review your personal credit score. If it is low, it may prevent you from securing financing. This is why it is essential to make sure you are paying your personal bills and debts on time. Watch the amount of credit you have outstanding in regards to the amount available to you. This is referred to as your credit utilization rate. Lenders will want to make sure that you can pay your current debt. If you struggle with your payments, lenders may not feel comfortable giving you even more loans. Vendors and suppliers may also look at your personal credit score and total personal debt prior to establishing credit with your business or how much credit to extend to your business. By monitoring your personal credit score and maintaining a high credit score, it could have a significant impact on your business. A lower credit score could also cost your business by having a higher interest rate for a business loan.
Once your business is established, and you are able to take money out of the business, you may need to pay yourself a reasonable salary depending on what your entity type is. If you don’t have this requirement, I would suggest you take a look at your personal finances to see how much money you need on a weekly or monthly basis to ensure you are able to cover your personal finances. If possible, try to have a consistent salary or payment to yourself so that your personal finances are more consistent as well. As with your personal finances, you’ll also want to make sure you have set aside at least 3 to 6 months of expenses set aside in your business. This will help your business run without any personal injections of money if your business runs into any cash flow issues.
By keeping a positive mindset in both your personal and business finances, you’ll be able to set achievable goals and do anything you put your mind to. When you are more informed or knowledgeable about your finances, you will make better financial decisions. If you need help with your personal or business finances, I’d love to help. Having someone help you get started and on the right path to taking control of your finances can help alleviate the stress and anxiety you may be feeling on your own. How you do one thing in your life is often how you do other things. If you are struggling with controlling your personal finances and that has you feeling like you’ll never be able to manage your business finances, you just need to take some time, make your finances a priority and get the help you need to gain control so that you can build your confidence going forward.
Imagine having a system in place where you spend less time buried in paperwork and more time doing what you love. That’s where I help my clients. They are able to have proper processes in place, understand why they are following through with these processes, and they have more peace of mind when it comes to their business. Striking a balance between the demands of running a business and maintaining a fulfilling personal life is an art; it’s about creating an environment where you can thrive and support your lifestyle. By being proactive and setting up efficient processes, you can ensure a smoother, more enjoyable year-end, and you’ll be prepared to file any necessary filings with the IRS. By working with me, you’ll change more than just your bookkeeping processes. Like many of the clients I’ve worked with, you’ll go from not knowing how to get through all the stressful situations or being unprepared to being totally in control of exactly what you are choosing to get done at the time you want to have it accomplished by, all while knowing you are doing enough and you’re able to enjoy your business and your personal life. I help clients just like you with strategy, mentorship, and coaching. When you work with me, you’ll show up much more differently than you do today, and, after all, this is what you ultimately want in your life, right? You can be stress-free in both your professional and personal life. Come join me. When I work with clients throughout the year, they are able to reduce their stress and overwhelm, understand how to master their small business finances, develop solutions to grow their bottom line, and create a work-life balance they truly enjoy. I encourage you to take the next step by signing up for a free consultation where I’m going to teach you the first step in my process so that you can eliminate stress, overwhelm, or overworking in your professional or personal life while you continue to get done what matters so that you can live your life with joy, purpose and a more fulfilled life. Feel free to reach out to me with any questions you have; I’d love to help you on this journey. You can schedule your free consultation or sign up for a coaching session today at www.FinancialAdventure.com. As a Certified Public Accountant and Certified Life Coach, I can help you set goals and develop a plan that will allow you to lead a happier and more sustainable life in your business, career, or your personal life. I’m here to guide you through the financial aspects of your business as well as help you focus on the strategies you need to follow to reach the success you want to achieve in your professional or personal life and stay committed so that you can continue to keep pushing forward and relieve the stress, anxiety, or overwhelm you are currently feeling. Having an accountant and certified life coach like me can provide you with valuable insights and ideas to help you simplify your life, which enables you to go back to enjoying your professional and personal life. I work with business owners, accountants, and other financial professionals to create the actionable steps they need to take to ultimately achieve their goals while getting relief from the stress and overwhelm they feel from the pressure of owning a business, deadlines, and the workload they face every day. If you are struggling with this as well and would like some help developing a solution, help strengthen and maintain your emotional health, increase your well-being, create a more positive, happy, and joyful life, set and achieve your goals, and manage your relationships, I’d love for you to join me in my Balance Life Coaching program so that you can live a more purposeful life. Each week, we meet privately one-on-one, and you get to bring whatever is on your mind on any given week. I also have a daily coaching program where you can talk to me whenever it works best for you, 24/7, any day of the week. In either program, you get to work on your highest priority, whatever you want more of in your life, or if there is something that is weighing on you heavily that you need coaching on, and we’ll work through it together. Having a certified life coach like me helping you through all of this allows you to feel so seen and cared for, and the results are amazing. Everyone benefits when they work with a certified life coach. After every session, you feel energized, and you know exactly what to do for the day or week to come, and relief knowing we will meet again to go over anything that comes up after your session. You’ll gain self-awareness while you take each step toward your goals. The investment in either of these programs is an easy yes for you. I’ve set these programs up in the most supportive way. If you are ready to join the Balance Life Coaching program, you can go to www.FinancialAdventure.com and click on the work with me button. You’ll see the link to join as well as additional information about the programs. Sign up now. There are limited spots available for these programs due to the one-on-one aspect, and they do sell out. If the payment link is gone, you can get on my waitlist to join the programs when additional spots are available. I help people get results and live a more joyful life. I coach everybody on everything. I know there is something you want in your life, and I can help you get it. I know this is something you’ve been waiting for. I’ve been asked by many of my listeners to create these exact programs. The faster you get access to the program, the quicker you’ll see the possibilities available to you. I also have a risk-free guarantee. I believe so strongly that everyone benefits from coaching that when you sign up for the Balance Life Coaching program today, if for any reason you are not satisfied with your first session, you can send us an email, and we’ll refund you immediately. Are you ready to enjoy your life now? Why would you want to wait? Make this investment for yourself. Take the journey with me…make it happen for yourself. Ask yourself why you need this program in your life right now. Are you ready to make bigger, bolder, stronger life goals? I’m looking forward to meeting with you soon and digging deeper to see where you currently are in your business or career and start creating actionable steps so that you can reach your vision and goals for the future, not only in your business or career but also in your personal life. I’m ready to work with you, see all of your successes, and watch you thrive in your business or career while creating your best work-life balance. I’ll post links to this and other valuable resources for business owners and accountants where you are listening to this podcast.
And, you know I’m going to ask…what’s at least one thing you will take away from this episode that will help your business succeed and grow your bottom line? If you need some accountability, join our PRIVATE Facebook community and post your action item, we’d love to support you.
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