Why So Many Business People Struggle with Personal Finance

finance photoBusiness executives and owners alike struggle with their own personal finances. In some cases, it means that big salaries leave extra money on the table for frivolous spending. Rather than investing money for large capital gains later, funds are spent on material things. Some businesspeople believe that your status in society is based upon the material things you own. Money does not necessarily mean status. Having your finances in order is far more important than what you’re showing off materialistically.

Spending Separations

Many business professionals, especially small business owners, fail to separate personal finance expenses from business expenses. What this does is creates a mess at tax time. It also makes it nearly impossible for a businessperson to successfully run a business since business funds should not be used to pay personal debts. You have to be able to separate your expenses effectively. Your personal profits from the business should go back into it as an investment. This way, you are receiving a return on your own, personal investment.

3 Tips for Giving Your Small Business a Financial Spring Cleaning

spring cleaning photoSpring cleaning season is upon us and it’s not just time to declutter your office or take inventory, it’s also the right time of year for small business owners to get organized financially. From reviewing business expenses, to managing cash flow and revising business plans, every business owner can benefit from a financial refresh. Below are three financial tips to help you stay on track this season:

Restore your business expenses.

As a small business owner, you’re likely responsible for filing your taxes on a quarterly basis. If you don’t already do this, establish a separate bank account dedicated to your taxes and use it to set aside a monthly amount toward estimated taxes. Also, keeping business checking and credit accounts separate from personal accounts can help you maintain accurate and complete records of all business-related income and expenses, and can help you plan accordingly for when tax payments are due.

If you’re unsure about your estimated tax obligations, it’s wise to consult a tax specialist who can advise you on the best calculation method for your business. They can also help you to properly track and record your earnings and deductions.

Photo by storebukkebruse

4 Effective Strategies to Increase Your Bottom Line

profit photoWhen business owners strategize ways to increase profits, their energy is usually focused on how they can attract more customers to generate additional sales. However, working smarter — not harder — is the key to boosting the bottom line. Improving net earnings is directly linked to controlling costs, increasing productivity, marketing resourcefully and tightening credit terms.

Strategies to Increase Your Bottom Line

Train Employees to Increase Productivity

Well-trained employees who know the scope of their jobs and are held accountable for their productivity can save companies thousands of dollars each year. The time and money invested in training employees to be savvy customer service representatives, enthusiastic brand ambassadors and productive team members are returned in higher-quality products, increased output, happier customers and better retention rates. Along with training, productivity tracking programs can identify which employees are excelling at their jobs and which under-performing employees need extra support. Strong training programs focus on developing functional skills, improving company processes and streamlining strategic goals.

Avoiding Direct Deposit Woes

wallet photoDirect deposit of your income tax refund makes a lot of sense – you’ll get it quicker and it’s often safer. There are several options for obtaining your refund, including splitting it via direct deposit into up to three checking or savings accounts, as well as Individual Retirement Arrangements, Health Savings Accounts, and Coverdell Education Savings Accounts. But take caution and verify routing and account numbers carefully! Although you can usually pick up the routing number for your checking account from the face of your checks, routing numbers for other types of accounts are not always apparent. The IRS assumes no responsibility for taxpayer or preparer error, so you should make sure your account and routing information is accurately entered. If you make a mistake and the financial institution rejects the deposit, the IRS will send you a check for that portion of the refund. But if you incorrectly enter an account or routing number belonging to others and the designated financial institutions accepts the deposits, your only option is to work directly with the financial institution to recover the funds.

Improving the Financial Health of Your Business

thermometer photoA 2015 survey of small business owners shows that 76 percent would say that their business is in excellent financial health. Even though three-quarters of businesses could say this, can you? Being an entrepreneur requires a sense of self-confidence and a firm belief in your idea so you can have the courage to invest in a dream of your own, as opposed to living someone else’s dream in a regular job.

There are a number of challenging steps that come your way when you decide to have a startup; these issues range from the general structure of your business to staffing decisions. The financial aspect of starting your business, however, tops the list of factors that need to be considered very carefully and need proper planning and monitoring. There are steps to guide you in the better management of your finances so you can see your dream to its end, without its succumbing to financial issues. Have a look.

6 Financial Mistakes Small Businesses Make All the Time

budget photoWhen it comes to starting a business, it’s all about the budget. Maintaining a healthy bottom line is key if you want your fledgling venture to take flight and grow.

Too often though, small businesses make a variety of financial mistakes that allow their hard-earned money to leak away. For example, 21 percent of small-business owners say they claim less than half of their business expenses, which means they are dramatically overpaying their taxes. A large reason for this is the tendency not to claim small figures, which is a mistake: Even $5 expense claims can add up, so get in the habit of saving your receipts.

To discover five other common money mistakes small businesses make (along with ways to fix them), check out the infographic below courtesy of Make It Cheaper, a company that helps businesses save money on energy bills and other services.

Photo by GotCredit

9 Important Money Tips That Will Help Your Company Grow

cash photoMoney is always on the minds of entrepreneurs.

It’s not so much the idea of winning lots of money by finding the pot of gold at the end of the rainbow. Instead, founders worry about whether they’ll have enough cash–whether from customers or investors–to pay their employees and suppliers each month.

While trying to meet their monthly cash needs, founders are always planning their next big push to raise the capital needed to reach their venture’s growth goals.

The start of a new year is a great time for founders to think about money questions. Here are nine such money questions and my tips on how best to answer them.

Photo by 401(K) 2013

17 Ways to Make More Money in 2016

cash photoLook at the most popular New Year’s resolutions. In addition to spending time with family, living life to the fullest, and getting healthy, people want to stop being broke. It’s understandable — and also one of the most frequently broken resolutions.

Don’t get discouraged. You really can make more money, lower your debts, and improve your financial future. There are no easy and magic solutions and many of these may seem obvious, but there’s a difference between hearing about a solution to a problem and actually taking action. With some regular effort you can improve your lot in a lot of ways.

Photo by 401(K) 2013

What Financial Goals Can Help You Succeed in 2016?

2016 photoA recent study, The Principal Financial Well-Being Index, found that business owners generally have positive vibes about where they stand financially. Almost half are optimistic about the 2016 economy—and with good reason. Sixty-four percent feel their financials have improved significantly or somewhat from last year, and 74 percent have built a surplus of cash.

I asked three small-business owners—Sarah Jacoby, owner of dance center Studio 9 in Poughkeepsie, New York; Jenne Myers, CEO of nonprofit Chicago Cares in Chicago; and Vick Vaishnavi, CEO of software firm Yottaa in Boston—about their financial preparation and goals for 2016, as well as their anticipated results.

7 Smart Financial Steps to Take in 2016

steps photoIs this the year you want your financial picture to shine? We’ve got some good news: There are no tax increases looming, and the banking, housing and labor markets are solid. That means this is the perfect time to shore up your personal finances and prepare for the long haul.

Here are some steps you can implement when opportunity, cash flow, existing debt and mental fortitude allow. Barring a sudden global economic or personal meltdown, you could wake up next January with a satisfied smile on your face.

1. Lower your income; secure your future.

If you’re over 50, consider setting up a defined-benefit plan to reduce your company’s taxable income — and ultimately yours. As earnings rise, you may be able to contribute more than with a defined-contribution plan, such as a SEP (simplified employee pension). Defined-benefit plans provide a fixed, preestablished benefit for employees at retirement. There is also an age-weighted profit-sharing plan you can set up for you and your employees that follows a similar structure. If that sounds too complex for you, then make sure to take these tax deductions (which many people overlook): sales taxes, healthcare premiums and expenses for charitable work and education.

Photo by ell brown

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