The most amazing thing about working is being your own boss; controlling your time off work, and even managing your finances and Lendgreen loans which are very important. Your business can be anything from freelancing to contracting or even starting from the ground. But one thing you must always keep in mind when working in your own business is to never neglect your expenses. Always know exactly what amount you have at any particular moment. And ensure that every dime you spend in the business is accounted for and leads towards the business’s growth. Here are some vital tips that you can adapt to your business when it comes to managing your own money if you are self-employed.
1. Have a savings buffer
It is vital to know that as a self-employed business owner, a drop in income is something you must always prepare for. Which means that you should have a substantial sum of money set aside for any business emergencies. A sum equivalent to about three or even six months of your earnings can be significant should you feel the pressure of covering your mortgage or any other bills if work slows of a client is late with the payments.
2. Save in a pension
Every self-employed business owner is solely responsible for his/her pension provision. Even if things get tight, it is better to always save some amount and also make an effort to try and review and even increase the contribution levels whenever you can.
3. Budget
Revenues of every new business are always bound to be sporadic or erratic. This should always put you, the self-employed business owner, on high alert and be prepared to work out the minimum income that you might need each year to run the business and write a detailed budget about the same. Save as much as you can and stick to the set budget as this is what will help you out of any rough patches you encounter in your business in the future.
4. Prepare for remortgage trouble
Self-employed workers find it difficult landing a decent mortgage, especially in the early years of their business being in operation as most lenders are always looking to see at least two or even three years of the business’s accounts.
5.Get life cover
The type and amount of life cover that you decide to go for needs to be aligned with your personal circumstances. Maybe you need the cover to offer your spouse or child some financial support when you die or pay off a mortgage or any other debt. The life cover will take care of all of these.
6. Consider medical cover and income protection
As a self-employed worker, it would be wise to cover financial hardships in your business in case you need to lay off work for some time or permanently due to injury or illness. A self-employed worker’s income ceases the moment he/she stops working unlike that of an employed counterpart, whose salary will continue trickling in if he/she falls ill or is injured and unable to work.
A self-employed worker may also need to get an annual private medical insurance coverage as well or even opt for the pay-as-you-go option where you will have to buy private treatment when and as you need it.
7. Buy professional insurance
As a self-employed worker, you might also need to buy a professional indemnity insurance which will cover you against claims that are made by clients in any financial loss, reputational damage, design or services. A public liability insurance will also help cover your business tradesman and professionalism.
8. Get a general insurance cover
You can also opt to get home contents cover plus car insurance to ensure that the policies are also amended for ‘business use’ as well. As a self-employed worker, failing to declare that you work from home can end up invalidating any claims.
9. Have a realistic business plan
Whenever you decide to have a new business venture, writing and following a realistic business plan is the best first step to take. Set out your business sales targets and also work out the total costs you will need to ensure you achieve the set goals plus other factors such as your business stocks.
10. Hire a tax accountant
As a business owner, you will be required to file annual tax returns plus quarterly VAT returns if, in any case, you become VAT registered. This is the point where you need to have a tax accountant by your side. Take the pressure off your worrying by hiring an experienced and qualified accountant to help you with your tax returns.
