Copyright Chris Carroll and DirectSalesTalk. If you see this on any other site without my byline, please let me know.
We all know that the reason so many of us work from home is to earn money, but it is critical to our business health that we keep our business finances in black and put some away for a rainy day as well. We need to keep our business account out of debt.
We work hard and celebrate when our business makes money. It is important to pay ourselves with some of the proceeds on a weekly or bi weekly basis to validate your hard work. It is also just as important to save a portion of your income for other expenses, such as taxes, business expenses like hosting, graphics creation, and other issues such as returns, if you sell product. I think it is important to keep a slush fund as well for any unexpected expenses that can pop up.
One great thing about having our work at home business is that we can add to the family income and take over a specific bill or two just to alleviate the pressure. We also need to make sure that we are using part of our business income as savings for the family as well. Setting yourself a business budget can really make a difference in how you look at your business.
First, pay yourself and your family. If your income varies on a weekly or bi weekly basis, set a percentage rate that you should take for your payday. It can be 60-70% of your income. Next set aside at least 20% for your expenses and an additional 10-15% for taxes. Whatever is left over, leave it in your account to accrue. You never know when additional expenses will pop up and that 5-10% can really come in handy to cover some of that. After 6 months or when you have a nice slush fund built up, transfer it to a savings vehicle for your family and continue to save in your business account.
If you sell product, set a limit on how much you can spend on yourself. Yes, it’s nice to be able to save by getting your goods at a discount. But remember, if you spend it, then that is less that you are paying yourself in cash each week.
By following these suggestions, you will soon be seeing some money adding up in your account. It will feel nice to know that you are covered in case expenses come up and it will impress your spouse as well! Running your business in the black and debt free is a great feeling. Turn your business into a healthy savings machine today and reap the benefits tomorrow.
Copyright Chris Carroll 2011