Working for yourself has many benefits, including setting your own hours, being your own boss, not having to ask for a day off or vacation time, and being in complete control of your business.
With any advantage, though, comes a disadvantage. As anyone who is self-employed knows, the one major downfall of running your own business is unstable income. When you work for yourself, you don’t have a paycheck coming in once every two weeks. You typically don’t get bonuses, and taking time off means you might not get paid.
Whether you’ve been self-employed for the past 10 years or you’re brand new to the world of self-employment, managing your finances should be one of your top priorities.
It can be tricky, but here are tricks that can help:
Keep Business Expenses Separate from Personal Expenses
You should absolutely have a separate checking account and savings account for your business. While it might seem confusing at first, having separate accounts will streamline your accounting procedures and simplify your taxes.
Plus, it’s much easier to keep track of exactly what you’re spending and what you’re bringing in when all your business expenses and income are funneled separately into their own account.
Have a Tax Savings Account
Running your own business doesn’t mean you won’t have to pay taxes.
Your business income minus your business write-offs will determine what percentage you are required to pay in taxes. To avoid fines and penalties, small business owners should pay estimated quarterly taxes. To simplify your bank accounts and help keep your income more organized, create a separate savings account just for taxes.
Depending on your income, you’ll want to transfer between 15 and 30 percent of your profit into your tax savings account.
Create a Zero-Sum Budget
A zero-sum budget is an extremely specific budget that leaves no money left over at the end of the month. By carefully monitoring your expenses every month, you tell all of your money where to go, leaving nothing left once all expenses have been paid.
To get started, list all of your fixed expenses for the month. Then, track your expenses for the next three months to see what your variable expenses are. Find a number that works for you each month and transfer that amount from your business checking (your income) to your personal checking.
Any new business money that comes in goes directly into your business account. At the beginning of each month, you transfer the amount you need again and start over.
Use Budgeting Software
To go along with your zero-sum budget, you should use budgeting software for both your business and your personal life. is a both free programs that allow you to track your spending, create categories for different areas of spending, track your net worth, follow your investment accounts and more. Budgeting software can help keep you on track each month and help you monitor your spending.
Managing your bank accounts doesn’t have to be complicated when you run a small business. With your finances and bank accounts running smoothly, you’ll be able to devote more of your time to what really matters—your business and your customers.
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