If you are thinking about revamping your career and working as a self-employed handyman, managing your finances is one of many different aspects of the job. Although it may at first seem intimidating to organize your finances and get the ball rolling, the good news is that there are many tools and best practices for finance management.
Keep reading to learn some of the best, easiest ways to keep your finances in order and well managed from Day One.
Create a business budget
Before you launch your career, it is worth taking the time to work out a budget for your business. If you do not already own the requisite tools and equipment, this will obviously be the biggest consideration.
However, it is important to consider other costs which might not immediately come to mind, such as marketing, insurance, licensing fees, and fees for any software or web services that you might want to use to run your business, manage invoices, or promote yourself.
Organization is vital
If being organized is not your strong suit, fear not, with a small amount of preparation and regular work, you can stay organized. If you are not actively keeping track of your business finances, it is easy for invoices to go missing and for receipts to get lost – that means you might lose out on payments from your clients, and it means that filing your taxes will be a nightmare.
If possible, it is best to maintain digital and physical copies of your records so that you have backup copies of all of your documents should something go wrong, or paperwork is lost. You may find that an accounting software application is especially helpful and worth the cost.
Work with an accountant
If you are working with an accountant, they should be able to help you stay organized from the start of your business. By consulting with an accountant before launching your business, they will be able to help you avoid common financial mistakes and pitfalls before you even get started.
An accountant is an additional expenditure which you may want to avoid. However, you will likely realize just how helpful they are when tax season rolls around and you need to file taxes and look into all of the possible business expenditures you can be compensated for.
Invest in insurance
One of the most important steps you can take to manage and protect your finances is to take out insurance. You may think that insurance is not strictly necessary, however, having insurance can mean the difference between keeping your business and being brought to court or going bankrupt.
Anything can happen on a job site and if someone is injured, if a piece of property damaged, or if a disgruntled customer decides to sue, you will be much better protected if you have a proper insurance policy.
Next Insurance offers general liability insurance for handyman jobs which are specifically tailored to the risks and hazards associated with the profession. Next Insurance also understands that self-employed business owners are busy and that anything that cuts down on paperwork and processing times is a great benefit.
You can get a quote, take out a policy, and ask for help from policy advisors all through Next Insurance’s easy to use platform for both mobile and desktop.
Separate your finances and pay yourself a regular paycheck
Although it is difficult, it is essential for small business owners to separate personal finances from professional ones. By opening a bank account dedicated to your business, you will be able to easily keep tabs on your business’ finances.
Once your business has taken off, you will be thankful that you do not have to spend hours combing through transactions determining which payments were personal rather than professional.
It is also the best practice to pay yourself a regular income. It may seem counterintuitive to pay yourself a regular income if you are self-employed, but it is a good habit to get into. Companies naturally go through peaks and troughs of profitability and through paying yourself a salary, you will be able to accrue a surplus in your account for the leaner times.
Take time to review your finances
The final tip is to dedicate time to review your finances on more than an annual basis. The budget you create before starting your business is never going to be the same budget you have a year into your role, much less two years. By taking a few hours to review your budget and expenditures every quarter or six months, you will be able to stay on top of any changes or adjustments that need to be made.