How to Budget for Small Business-Develop a Plan
Starting a new business can be exciting and offer you the freedom that you desire to become a successful entrepreneur. Getting started in business can be a journey due to the need to acquire skills, understand the business, find impactful mentorship, and develop an effective business strategy. Your business strategy will be a crucial component in your ability to catapult your business to success. Often, having a financial plan and professional CPA support is overlooked or viewed as a luxury expense. Having the help of a clear financial strategy and incorporating the expertise of a CPA is vital when designing the framework and operational infrastructure of your business. The following are tips for success that incorporate accounting into your business strategy:
1.) When you first start your business, you have to separate your business banking and personal banking. This is important because you will need to accurately calculate expenses, profits, revenue, etc. for your business.
2.) When you move funds from your personal account to your business account to get started, you can use those funds to purchase products that support the growth and development of your business such as supplies.
3.) After you purchase supplies and develop something to sell, this positions you to produce an increase or revenue.
4.) If you hire someone to provide services for your business, this would also count as an expense.
5.) As your revenue grows consider moving a portion of the profit into a business saving account.
6.) Profit can be reinvested into the business or paid to yourself as wages.
7.) When you pay yourself, you will have to pay self-employment taxes which are 15.3% and include social security and Medicare taxes. You then need to pay state and federal taxes.
In summary, make sure that you track all of your business expenses and create a filing system for your receipts. This information may potentially need to be sourced when you are reconciling reports and if you are ever audited. Visit www.tebcpa.com to book your consultation to develop a strategy for your business.