Managing Money Tips
Read these 7 Managing Money Tips tips to make your life smarter, better, faster and wiser. Each tip is approved by our Editors and created by expert writers so great we call them Gurus. LifeTips is the place to go when you need to know about Home Office tips and hundreds of other topics.
Pay regularly
There was a time, not long ago, when I feared April 15. I had always managed not to pay enough throughout the year, that I had a fairly big payment due. (I have a lot of kids, and hence a lot of deductions, but self-employed people must pay the dreaded "Self-Employment Tax," which is a full 15% off the top. There is no getting around it other than paying small chunks on a regular basis. I have found that monthly is best.
You get more with a carrot
When a customer owes you money, how do you treat him (or her)? Remember that you'll get a donkey to move faster with a carrot than a stick. I've had customers who have been EXTREMELY slow to pay, but I've always tried to treat them with kindness and understanding (especially the understanding that they are having a hard time themselves), and that has led to the development of some very fine relationships.
Watch your burn rate
Remember the lesson of the dot-coms. Paul Hawken, author of "Growing a Business" suggests that having too much money at first (i.e. thru venture capital or other private investments) can leave you in a position where you don't really have to work to learn anything substantial about your business. On the other hand, those who "bootstrap" themselves, who fight for every penny they earn, gain real first-hand knowledge about the wise use of money.
Your Accountant
Harvey McKay, author of the "Swim With The Sharks" books, strongly advocated that the first person you consult in business is your accountant. If you EVER have any question about taxes, run, don't walk, to a tax professional.
Direct access for paying your taxes
A new website, www.eftps.com, offers small businesses a way to directly pay their quarterly or monthly federal taxes. You can even have the amounts automatically deducted from a bank account!
Save money, hire your son or daughter
The good news is that when you hire your children, the money you pay to them is taxed at their bracket, not yours. Everyone knows that your last dollars of income are taxed most heavily. By turning that income into an expense, you not only get to deduct it off the top of your income level, but the child most likely will pay no tax on it. (Of course, you have to file all the right forms, but a good accountant can help you with it.)
Are you average?
The average household has unsecured credit card debt totalling between $4500 and $8500. As a small office/home office business owner, try not to rely on credit cards as sources of funding for your business, however attractive and necessary it may seem.
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