Starting your own business in college can be a wonderful idea. It gives you a chance to earn money and avoid massive debts. It can be a fantastic experience and help you to give your career an enormous head start. It can even mean that you never need to work for anyone else if you choose to continue with your business, taking it full-time when you graduate.
But, it’s not always easy. Trying to juggle a business with studies, and with enjoying your time at school can be tough. It can be hard to get your priorities right, and you might find that you don’t always get it right. Managing your money can also be a challenge. In particular, it can be hard to keep your personal and business finances separate.
Failing to do so, however, can mean that your business is unable to grow, or that you risk your personal finances. So, let’s take a look at some of the best things that you can do to keep it all separate and manage your money effectively.
Learn More About Finance
You might know everything about your business. You could be an expert in your industry and someone that knows your products and services inside out. You might have no trouble earning money or growing your business. But, do you know about finance and accounting? Believe it, or not many smaller business owners don’t, especially in the beginning.
But, taking the time to learn about accounting and finance can give you a big head start, and help you to understand how your business finances work, giving you the best chance to manage your money. Learn from financial gurus like Hunter Perret, consider taking an accounting course, or hire an accountant to share their expertise and help you to set up systems to manage your business finances.
Keep on Top of Your Accounting
Many small business owners are guilty of losing control of their accounts or having no control in the first place. At the end of the tax year, they present an accountant with a bag of invoices and receipts and hope for the best. If you don’t know how much money your business is making, or how much it is using in expenses, how are you meant to know which part of your income is yours, and which part belongs to the business?
Set up some spreadsheets to help you to manage your accounts, get into the right habits when it comes to keeping receipts and invoices and set aside a little time each week, or even day, to file and fill in spreadsheets.
Open Separate Accounts
Having separate bank accounts can make things much easier. Open a separate account for your business, and consider getting a business credit card for business expenses. Make sure all of your earnings go into this account, and any business purchases come out of it.
Opening a business bank account can also have the advantage of helping your business to feel professional and serious, instead of just a hobby.
Pay Yourself
If you work alone, every bit of money your business makes is yours. But, if you want your business to grow, you’ll want to reinvest some of this. This makes keeping your finances separate seem difficult. But, it doesn’t have to be. If you’ve got separate business accounts and business cards, which all of your income goes into, pay yourself a salary every week or month and leave the rest in your business account, to be spent by your business. If that money never goes into your personal account, it will never feel like yours.
Try to pay yourself the same, set amount every week or month. This can also help you save for holidays and sick leave. Just keep paying yourself the same, no matter how much work you’ve done. Over the year, the weeks will even out.
Get into the Right Habits Early on
If you haven’t already got separate accounts and appropriate bookkeeping set up, do it now. Even if your business is barely making any money, getting into the right habits as soon as possible makes it easier to maintain when things get busier, and your income grows. It also means that you’ll never need to try to separate things later on when it’s a little more complicated.
Avoid Loaning Personal Money to the Business
In the early days, your personal finances might have to fund your startup. This is fine and is often a better option than taking out a loan. But, after that, it should be avoided wherever possible.
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