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Help Your Own Finances With These Essential Best Practices
As an entrepreneur, the urge to try to handle everything yourself when it comes to your business is a strong one. It's also perfectly understandable - after all, that "can-do spirit" has gotten you incredibly far in life up to this point.
Having said that, there are certain elements that you'll need to release control over, and sooner rather than later. The financial aspect of your organization is chief among them.
On the one hand, you could try to do everything yourself for as long as possible and then, only after you've encountered a series of issues, bring in the help of a professional. Or, you can choose to do so right away. Regardless of which end of the spectrum that you fall on, there are several steps that you can take today that will help your finances in a way that also better prepares you for outside help in the future as well.
Improving Your Finances, One Step at a Time
By far, one of the most important ways to improve your finances today has to do with keeping separate personal and business budgets.
Especially in those early days of your business, it can be natural to pour a lot of your own money into the day-to-day activities. Things can get to the point where it's easy to blur those lines between your own personal expenses and the expenses that are essential for your organization.
In no uncertain terms, you need to resist that urge, particularly when it comes to your budget. In any early-stage business, your finances on both sides of the line will fluctuate wildly. Because of that, you need to keep a careful watch over money coming in and money going out from both perspectives. Keeping separate personal and corporate budgets will help you do that.
Another key step to take involves being proactive about managing your expenses all throughout this process. If you made a list of all the successful entrepreneurs that you look up to, you'd probably be looking at some wildly different individuals. However, they do probably share a few key traits in common - and their ability to manage finances is chief among them.
To begin, monitor costs as closely as possible so that things don't start to surprise you. You don't even necessarily have to do anything other than take an active interest in monitoring your spending. This is true both from the corporate and the financial side of the equation. With a bit of analysis, you may be surprised by how much money it costs to live the type of lifestyle that you're accustomed to or to keep your business functioning from one day to the next.
Slowly but surely, you can start to have the confidence that only comes with knowing you're able to successfully keep things in balance. At the very least, you'll be able to start making the types of decisions that are rooted less in a "gut feeling" and more in cold, hard facts.
Additional Considerations About Entrepreneurship and Finances
One element of being proactive about your finances that people don't tend to think about until it's too late has to do with estate planning. For the best results, founders will want to utilize qualified small business stock, otherwise known as QSBS. This brings with it a number of benefits that are definitely worth exploring.
For starters, you can use QSBS as essentially a gift in exchange for other services that are being provided. You can use it to help not only compensate your employees but to retain them so that they don't look elsewhere for employment. This is a great way to save cash reserves for matters that need it more.
Keep in mind, however, that qualified small business stock is only available for both organizational founders and their employees who own stock in the company in question. The company also needs to be a domestic C corporation, can't have more than $50 million in assets right after it issues the stock, and it can't be part of a specific type of business like those that fall into the health or legal professions.
Provided that you meet all of those qualifications, however, this can be a great way to take more control over the future trajectory of your finances.
In the end, enlisting the help of a professional to manage both your personal and business finances is always recommended. There are also a number of steps that you can start taking today to make things easier when that day comes tomorrow, and the best practices outlined above are right at the top of that list.
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