Understanding the Full Financial Picture as a Business Owner
Financial responsibility can go beyond paying rent and making sure your cell phone bill is handled. If you are a business owner, there are many different categories of financial responsibility to consider. Make sure to get these checked off and accounted for in that bank account!
Incorporation fees and taxes - Whether you are an LLC or a larger company, there are fees required with the setup of these incorporations. Your type of business can impact your taxes as well. Talk to an accountant to ensure you have this base covered. This also goes for solopreneurs or sole-proprietorships. While you won’t have taxes taken out from the get-go like your old corporate job, you will be required to pay taxes from your income to the IRS. Stay on the safe side and put away 25-30% of all of your earnings to cover this expense later.
Cost of goods sold - This deals with your services and products. Your cost of goods impacts what you are able to save, spend and invest. Struggling to get your pricing to match what you need? Check out this previous blog post to learn our process on pricing.
Legal and accounting costs - You need to protect your legal rights and you will certainly need some help with your accounting items if you grow your biz. These services cost money and will need to be properly budgeted. You can try to DIY this, but it is always better to be safe than sorry when it comes to these things - delegate so you can focus on what you do best.
Subscriptions - Your accounting software, that social media scheduler, your membership club cost - these can all be classified as subscriptions. While these expenses may be on auto-pay, compile a list of them to get a better idea of where you money is going.
Office supplies - Maybe you have a small desk in your apartment or a spot in a coworking space downtown - these line items on your bank account need to be added your bigger financial picture. Even smaller items like printing costs need to be added in there as well!
Rainy day fund - Mistakes happen. Coffee can spill on computer or your camera might crap out a week before a shoot. Make sure to have money set aside for these mishaps. You don’t want to go into debt over these things, so prepare accordingly.
All of these categories should equal up to a pretty full financial picture. When balancing your books, include all of the items and search your payment history for any one of a kind or unique to your business costs that can be added in.
Be in control of your finances and also be smart with your money mindset! Want a little bit more guidance on what this looks like? Check out one of our favorite books, You Are a Badass at Making Money: Master the Mindset of Wealth by Jen Sincero.
At Mavenly + Co., we focus on helping women work for themselves. From free resources and podcasts to private coaching and events, our team is here to help you take your career + business to the next level. Whether you are a freelancer, side hustler, or full-time business owner, we want to help you succeed in your work. Want to learn more? Click here!