8 Keys to Money Management for New Solopreneurs

1. Face your fear.

Until you take a look at what’s really holding you back from tackling your money woes, even the best financial app won’t make much of a difference. Ask yourself: How would I rate my ability to manage money? Why? What am I afraid will happen because of my money habits? Once you’ve answered these questions, talk over your answers with someone you trust. Now’s your chance to prove yourself capable and confident in money matters.
2. Set aside regular time.

When I first got serious about managing my money consistently, I knew I had to overcome my fear of just sitting down and looking at it. I started by opening my checking account online every day. I looked at each transaction, thought about what bills would be coming in that week, and then closed the browser window. I didn’t take any action—just looked. After three months, I finally got rid of my fear around looking at my money. Now, I do a monthly money session so I can check the budget, print reports, and analyze my revenue potential.
3. Separate your personal and business funds.

Opening a business checking account might seem like just an extra step if you’re not operating as an LLC, but it makes a big difference in both your mindset and your accounting. It also makes your taxes a lot simpler. Be sure to reimburse yourself for any personal contributions to your business account, and don’t use your business account for any personal purchases.

4. Save for taxes as you go.

You can either use the quarterly reporting forms the IRS provides, or you can keep it simple as I did in the beginning and pull 20 percent out of every payment you get from clients. Set that money aside in a savings account for your taxes, and then mail the balance to the IRS once a quarter. Consult your accountant for more on tax best practices.
5. Give financial documents a home.

If you’re old school and want a filing cabinet, that works, but so does a digital receipt scanner and the Ever note app. Whatever you use to keep your financial documents organized, set up a schedule to make sure they don’t pile up waiting for you to organize them.
6. Run regular reports.

Monthly reports that are essential are the income statement and cash flow statement. These reports show what’s coming in, going out, and why. If you have any assets in your business, such as property or major equipment, or you have significant debt, such as a business loan, you’ll also want to run a balance sheet each month to show your overall equity and liquidity. Again, your accountant can help you get started with these simple reports.
7. Use the latest apps.

Quick Books, Xero, and Fresh Books are all apps that can help you keep track of your money. Check them out after you consider what you really need. I started with a free app online, then moved to a paid Quick Books account when I was ready for more in-depth reporting. The right app can help you budget, track savings, and even invoice clients.

8. Ask for help.

No one learns to maintain their business finances all on their own. It’s important to reach out and ask for help if you feel stumped or can’t get rid of your inner resistance to this part of your business. The healthier your money management habits are, the more peace of mind you’ll have as you make the right choices for the future of your solopreneur journey.



SOURCE:success.com