As small business owners, we’re used to wearing a lot of hats. Many of us do it all, from creating our handmade products to marketing, packaging, and shipping them off to buyers.
If there’s one area of the business that’s more challenging to do yourself than any other, it’s money management. And never is that more apparent than in the months between year-end and tax day.
With tax day drawing near, we wanted to know how some of our top online sellers manage their money. Here’s what they had to say.
1. If You Do It Yourself, Create a System – and Stick With It
“I do it all myself. I use a spreadsheet for expenses, sales revenue, taxes paid, etc., so it’s all together when I need it. I even collect receipts for all my expenses in envelopes. I tally all the expenses up every month and put the total into the spreadsheet. Then, at the end of the year, all my receipts and paperwork go into one big envelope and I staple a copy of the master spreadsheet on top.”
Chelsea Cavender, SLATHERlotions
2. Keep It in the Family… If You Married a Mathematician
“My husband is a number’s whiz, so he and I go over my business finances together. It used to be just me and my phone calculator. That wasn’t ideal. Now my husband lays everything out for me in Excel so I can focus on the creative aspects of my business.”
– Amber Mund, Crazy Couture Crochet
3. Start a Savings Account for Quarterly Estimated Tax Payments
“I just use a spreadsheet to manage my finances. It’s not terribly exciting. I have to pay estimated income taxes every quarter. So I set up a separate savings account that automatically withdraws money from my checking account every two weeks. At the end of the quarter, there’s enough in there to pay my taxes. It’s handy.”
Lisa Chayka, HELLOhappy
4. Know Your Limitations and Hire If Necessary
“I run all of the finances for my business through an accountant. I know my strengths and my limitations. I am very good at making candles and soaps. I am not very good at finance. I’m happy to let my accountant do what he is good at.”
– Amy Hoadley, Wix Wax Candle Company
Why I Hired a Financial Advisor
There was a time when handling money management myself was right for my business as well. That time passed in the last year or so. First, I realized that I hadn’t put any money into retirement since leaving Corporate America three years ago.
And then there was a little problem where my income tax returns kept getting, ummm, returned with corrections by the IRS. Oops!
So, I talked to a financial advisor. In under an hour of reviewing my tax returns and bank statements, he tossed out three concrete money management to-dos for my business.
- Start a health savings account (HSA). HSA contributions are not taxed, so an HSA is a great way to protect cash for a rainy day if needed or for retirement (when I can withdraw the money without penalty).
- Track your mileage and lunches. The cost of gasoline for twice-weekly trips to see clients, plus occasional networking events and more frequent lunch and coffee meetings, adds up.
- Save like a solopreneur. Solopreneurs have access to Simplified Employee Pension (SEP) plans which enable us to put money aside for retirement with limited paperwork and a nice tax deduction.
Keep in mind that these tips were specific to my financial situation. They may not be right for you. However, they offer insight into the breadth of tips and tricks for better money management.
So, whether you outsource your finances to a professional accountant (or your husband) or do it all yourself, keep your eyes and ears open. There are plenty of options for us as business owners. We just have to know what we’re looking for!
Speaking of which, are you looking for more great small business advice? Check out these articles to get more from our panel of top online sellers:
- 6 Entrepreneurs Share Their Secrets for Selling More Online
- How to Be So Productive People Will Think You’re a Robot