Whether you have invented a totally new product that you want to take to market or you have decided to go it alone in a business you have been working in for twenty years, once you have had an amazing idea for your own business, there may be no stopping you. However, there are some financial issues that it would be wise to consider when you are setting up your own business.
This may not be as obvious as you think. For example, you might think you need an office and some staff but unless you are working in a production industry it might be better to start off on your own or with one or two employees. Could you do this from home and save yourself money? It is worth considering this to start with at least. You can then expand if things go well for you.
If you are launching a product, marketing might need to play a big part in your startup costs, so you will need to factor this in so that you can create a buzz around your business to get it started.
Although you might want to plow all of your money into the business in the first few months, you will still need to live your life and pay your personal bills too. Keep a separate savings or checking account with your spending money in it for the first 6-12 months and factor this in to your startup costs. This way you will still have enough money to live on and you won’t have to take from your business before you can afford to pay yourself a salary.
You may need supplies to start your business up, but they don’t always need to be paid for straight away. Shop around and you should be able to find suppliers that can offer you a grace period. That way your invoices may be paid before you have to pay your suppliers which means that the payment might not have to come from your startup costs. However, it could be prudent to set this money aside anyway.
You will need to think about paying tax on the money your business makes from day one. Although you won’t be charged this straight away, your profit may be taxable. Put some money aside straight away so that when you do receive your first tax bill, you know where the money is going to come from to pay for it. Your accountant or business advisor will be able to advise you on this.
Review your finances on a regular basis as you may find that these differ from what you anticipated as you started out. Many businesses have high and low seasons too, so bear this in mind when considering your needs and finances. Also, you will want to review the business name you choose since it alone might ruin your startup without you even realizing it.
Follow these guidelines for your finances and you will be successful in your first year of business and beyond.