Whether you currently or are considering owning a business, are self-employed, or a commissioned-based sales person, today’s tip is specifically for YOU!
One of the biggest mistakes I have noticed many female entrepreneurs make is when they don’t treat their businesses like a business. This happens when owners don’t respect their money and they fail to treat their finances as a business transaction.
I call this turning your business into a CASH COW!
I want you to ask yourself the following questions:
- Do you run all income through one checking account?
- Do you wait until the year-end to tackle your bookkeeping with a CPA or bookkeeper?
- Do you rarely have funds available to put into your retirement account?
- Are scrambling to pay taxes at the end of the year?
- When you get a big sale or commission, do you spend more than you should?
- Is it always feast or famine – no cash cushion?
- Do you often fund your business through personal credit cards?
- Do you experience a lot of money drama?
If you answered ‘yes’ to the majority of these questions, you are sabotaging your wealth!
Here are some smart cash flow tips you can implement immediately to begin turning that cash cow into a profit machine:
- Set up separate checkingand savings accounts just for your business – even if you are the sole proprietor.
- Depositall your business income only into these accounts.
- Create a budget so you know exactly what your business expenses are every month.
- Pay Yourself First!
Here’s how you will pay yourself first. Cut four checks every two weeks as follows:
- Your personal paycheck: Identify how much you need to be paid to cover your personal expenses and pay that to yourself TWO TIMES A MONTH. Even if you earn $10,000 per month, if you only need $3,000 per month to cover your personal expenses, then cut yourself a check for $1,500 twice a month. The extra builds up in your business and then you can pay yourself a quarterly bonus!
- Emergency Fund: Send a check to your savings until you have a three-month money cushion.
- Retirement Fund: Send a check to your savings account so you can fund your retirement plan – usually some sort of IRA or SEP IRA, so you have the money available when your CPA tells you how much you can contribute. I’ll talk more about this next week, but if your goal is to fund $10,000, then you want to send a check for $384 every two weeks.
- Estimated Tax Fund: Send a check to your savings account to pay for your estimated taxes payments. Your CPA will tell you how much this is and provide you with the forms to send it to the IRS.
If your goal is to have a successful business and to create wealth, then you need to schedule time right this minute to sit down and address these cash flow techniques. This means meeting with your CPA to put your retirement and estimated tax payments on the radar screen as well as meeting with a financial planner to set up a retirement plan, and with your banker to create the appropriate business accounts. Taking these steps will make a huge difference in your life. You will be making smart money choices. You will be able to sleep at night. And you will be building wealth.
If you haven’t checked out our FREE course yet featuring my signature six-step system called, Unlock Your Financial Power: They Key To Health, Wealth & Happiness, be sure to do that now by clicking here for immediate access!
Katana Abbott, CFP® practitioner, is a Life and Legacy Coach™, host of the Smart Women Talk Radio™, founder of the Smart Women Companies with over 1 million subscribers globally, inspirational speaker and author of several books.
She began her financial planning career in 1987 and became a Certified Financial Planner™ practitioner. In 2003, Katana created Smart Women’s Coaching® to offer financial coaching and educational workshops for women in transition who are dealing with caregiving, death of a loved one, divorce, retirement or looking to create or grow a business. She founded Smart Women’s Empowerment in 2008 to bring free financial empowerment resources and programs to women around the world through her team of Contributing Experts. www.katanaabbott.com