The internet is filled with information on how to save money for your online business. It all covers the details on running smart promotions, automating processes and figuring out how to utilize search engines well.
This is all fine and dandy, but what happens with your own personal finances? Many startup owners simply think of their business and personal finances as one, but this is not exactly how you should configure it.
Yes, your online business is a part of your own personal wealth. It’s an investment. But that’s all it should be in order to keep your own personal finances in order.
Dumping your entire savings into a new ecommerce shop works as a move of desperation, considering if you make a few careful moves, you can end up saving money for retirement and not have to reconsider how much you’re going to eat on a weekly basis.
You need to put away money for yourself when building a new online store, because it leaves you with a nice safety net, and it becomes practice for those times when money is tight with your actual business.
Therefore, keep reading to learn about the best ways to save up your own personal money, even when that pesky new business is putting some pressure on you.
Make Sure You Diversify: Don’t Only Invest In Your Company
Many online store owners only think about an individual store as their sole source of income. However, as any Finance 101 teacher will tell you, this is not exactly a great idea. Sure, most of your money may go into the one endeavor, but just like investing in stocks, or developing a large lists of clients as a freelancer, you need to make a system that minimizes the risk for you.
Along with making your life more interesting, starting multiple businesses is a way to make your bets more reliable. For example, spending all of your personal money on one online shoe store may seem like a great idea, but what if you diversified and made two other companies with other shoe styles? It may take a little time to get all of your companies running and set up email marketing campaigns for each one, but the most successful entrepreneurs are always looking to the next business opportunity. Don’t get stuck on that initial baby of yours.
Create an Emergency Fund for When the Sky Falls
Whether your emergency fund resides in a savings account or a mutual fund, you’d be smart to realize that everything isn’t going to go your way with your business ventures. In fact, personal issues are likely to muddy your financial standing as well. What if you break an arm and have to go to the emergency room? What happens if your company gets sued one year? These bits of stored money could be lifesavers down the road.
Think About Retirement and Sheltering Money from Taxes
The Roth IRA is one of the safest, most profitable options for you when planning for retirement. You can choose between a Roth or regular IRA, but many sources state that if you put in around $5,000 every year, you can end up with over $1 million dollars by the time you retire.
401Ks are also reasonable options, but the point is to start putting away a little bit of money every year to ensure that your retirement isn’t spent working your butt off. Yes, you can take this money out early in an emergency, but fees will be applied.
Never Use One Bank Account for Business and Personal
How can you distinguish between the personal and business purchases if all of the money is stored in the same account? Having a single account for buying burgers on the weekend and paying your employees is a sure fire way to have some overlapping expenses. For example, you won’t care as much about taking your own personal funds to pay for business needs if it’s all in one spot.
The same goes for wasting company money. Keep your finances separate to keep your personal life and business afloat.
Automate All Your Bills and Pay Things Off On Time
If you’ve ever missed a credit card payment, you know how expensive it can get. Therefore, it’s recommended to automate all of your bill payments so as not to incur any fees that come along. This goes for your rent, water bills, energy expenses and more. The business expenses should be automated as well, but in order to keep your own personal finances in check, you need automated payments to stay out of the red.
Hire a Professional Accountant for Taxes
Completing your business and personal taxes is a pain in the butt if you try to save some money by completing them yourself. It’s one of the downsides of being an entrepreneur, but you must use a professional accountant to ensure that no money is left on the table at the end of the day.
Not only does an entrepreneur have to pay additional taxes for social security and other services, but you’re bound to miss a tax deduction if you try to complete the forms yourself.
Consider Not Partnering with People Who Work for Free
Friends may say that they’ll work for free, but quite often, entrepreneurs realize that they feel bad not compensating friends at all. Therefore, payments sometimes come out of your personal funds. You may end up paying for lunch on a weekly basis or rounds of beers on the weekend.
The point is, you should consider denying any work from people that is offered for free. This type of work is usually not going to be any good for your business, and you’ll just start digging into your personal savings to show some sort of appreciation.
Over to You…
Now that you’ve had a chance to learn about putting away money for yourself when building an online store, let us know in the comments how you like to save personal money while running a business. Also, if you’ve struggled with some of these tips in the past, share about how you plan on changing in the future