Today’s post is from our guest, Jim McKinley. You can learn more about Jim in his author profile below the article.
New business owners certainly appreciate the value of a dollar, but they also know they need to spend money to make money. To keep your books balanced and your expenses under control, you need to know which tasks and expenditures are necessary and how to prioritize financial issues. It’s best to be smart about your business expenses and to stay on top of your tax responsibilities.
1. Use Your Time Wisely
When you are a new business owner, especially one who works from home, you need to use your time wisely and be as productive as possible to save yourself time and money. Of course, it’s convenient for you to work while your kids are at school or when you typically are most alert and have the fewest distractions, but you need to consider the schedules of your customers as well. Once you start working from home, you will get a feel for your most productive times of day and which days you can afford to put your family and interests first.
If you’re new to running a business from home, you will need a plan for dealing with distractions because you likely will struggle with work-life balance. It’s difficult to go through emails and return calls when you are staring at a growing pile of laundry and hearing your kids calling for you to play with them. To help yourself be productive and avoid distractions, schedule breaks and reward yourself with a cup of coffee or round of games with our kids. Use a break from work to throw in another load of laundry and use the timer on your washer as a signal for your next break.
2. Prioritize Your Daily Tasks
Part of using your time wisely is understanding exactly what you should spend your time on each day. Understanding how to prioritize your day is key, and taking advice from people who have forged the path for you is helpful. One tip people who run businesses from their homes share time and again is to realize that you cannot do it all. You need to make priorities and maintain a schedule each day, yet remain flexible and forgive yourself when things don’t go as planned.
At first, your priorities should be growing your business and establishing relationships with customers. Set up an automatic reply to social media messages to free yourself to respond to phone calls and emails. Then, set aside time each day to respond to those messages so you don’t waste valuable time on social media activities that are unproductive. You may find that you also need to set up an automatic email response if you are losing too much time each day to your inbox. Then, you can schedule a few times a day to reply to email; it helps if you filter your inbox so you can address the most pressing email first.
3. Take Advantage of Business Software
Staying on top of your business expenses and tax responsibilities is easier for new business owners who take advantage of business software. Just as you will save time by automating message and email replies, you will save time by automating as many of your financial tasks as possible. There are several software solutions for self-employed business owners available today, and NerdWallet recommends a few inexpensive, yet powerful offerings that feed into your 1040 and help you track your assets, deductions, expenses, and more.
Keep in mind that many of your initial startup expenses count as deductions, so don’t worry so much about purchasing a software solution or office furniture for your home office. These upfront costs will help you at tax time. Other deductions include your utilities, raw materials, office supplies, and other business necessities. Keep track of all your receipts and be sure to include expenses as part of your tax records.
Don’t forget to make quarterly estimated tax payments throughout the year and to pay self-employment tax. If you feel overwhelmed by managing your expenses and tax responsibilities, hire a reputable accountant specializing in small businesses. His fees count as business expenses, too.
New business owners who work from home can manage your time, expenses, and tax responsibilities by pinpointing your most productive times, prioritizing your daily tasks, and taking advantage of business software or hiring an accountant specializing in small businesses.