Managing Your Personal Finances as an Entrepreneur: 14 Tips From Leading Experts

As an entrepreneur, it's important to have your personal finances in order, because you never know what may happen with your business ventures.

There's no doubt about it that being a successful entrepreneur requires a lot of expertise in a lot of different areas. Arguably one of the most important aspects to becoming a successful business owner is having your finances in order; after all, with no money, you've got no business. So, to help aspiring entrepreneurs take their next step towards building their empire, we've asked 16 expert entrepreneurs for their best piece of advice for managing your personal finances. Here's what they had to say:

1. Diversify!

"Diversify. Diversify. Diversify. I know that's canned advice you would hear from almost every other "financial expert," but it rings especially true for entrepreneurs. Here's something you might not want to admit to yourself: your entrepreneurial venture has a greater chance of failing than succeeding (gasp!). By diversifying and placing funds into another side business, alternate investments, or just setting aside cash, you will give yourself breathing room in the event that you have to call it quits or need to pivot to another business. In my own experience, I have been able to diversify into other ventures that operate independently of each other and that has led to constant growth and more exciting opportunities."--Jeff Rose, GoodFinancialCents.com

2. Plan For Inevitable Rainy Days (Or Months)

"Since many entrepreneurs have to deal with irregular income, it's important to budget your personal finances around that to make sure that you have savings that you can draw from in the leaner months. You need to know that you can cover the essentials like housing, utilities, insurance, and food. So add up those critical expenses and put aside enough to cover at least a couple months."--Tom Drake, Canadian Finance Blog

3. Plan For Your Future

"Don't forget, you should still be saving for your retirement. Even on a fluctuating income you should aim for a small bit of savings each month. A good starting point would be to open up a Roth IRA and contribute the max each year. If you want to do more, consider a SEP IRA or Solo 401K account, which will help you shelter a lot of your business income from taxes."--Philip Taylor "PT", Founder, FinCon, PT Money: Personal Finance

4. Separate Business Funds From Personal Funds

"When you're an entrepreneur starting your own business, it can be a good idea to keep your personal finances and business finances separate. Not only will it give your business more credibility and a sense of legitimacy, but in some cases it may also help reduce your personal liability were something negative to happen down the road. It will also help you to be organized when it comes to paying your taxes, managing your bills and other payments."--Peter Anderson, Bible Money Matters

"It's simple but vital: Keep business and personal accounts separate and document profit distributions to yourself. As a one-person business, I didn't set up separate accounts soon enough. The CEO of a 10 or 100 employee business wouldn't use corporate accounts as his own; why would somebody running a company of one or five?

Not only do separate accounts make tax-time easier, they're essential if you want to sell your business or you face litigation or bankruptcy. In the worst case, intermingling personal and business accounts may negate the protections offered by your business structure."--David Weliver, Publisher, MoneyUnder30.com

5. Keep Your Expenses Below Your Income

"Never forget that expenses rise to meet income. This is the gist of Parkinson's law. This is the reason that a couple months after most people get a raise, it feels just as tight financially as it did before the raise.

Without an intentional effort, houses, desks, kitchen sinks naturally get messy and cluttered. We have to take action ON PURPOSE to keep things clean and organized. The same ON PURPOSE effort needs to be made to keep our expenses BELOW our income."--Bob Lotich, ChristianPF.com

"Since you probably have a budget for your small business, make sure one is in place for your personal finances as well. It can be easy to let managing your own money fall through the cracks while trying to grow and expand your endeavor. Use a website like Mint (it's free) and enter in accurate amounts for your monthly bills. You'll probably need to estimate your income unless it is consistent. Then, work on reducing all monthly bills. Your ultimate goal is to get your spending under your estimated income. Once you have a surplus, use it to pay down your credit card debts, start or improve your emergency fund, or set it aside for your retirement."--Andrew Schrage, moneycrashers.com

6. Automate Your Bill Payments

"When you're spending every waking minute on building a business or releasing a product it's easy to overlook personal bill payments. Automated payment services that let you setup specific rules for each bill and alerts for exceptions allow you to put your bills on auto-pilot and focus on your business. If you use a credit card you can help avoid leaking money via fees and interest by setting up spending limit, payment due, and late payment alerts."--Ben Edwards, Money Smart Life

7. You Get What You Pay For

"Hire the best people, not the cheapest. If someone is willing to work for free, say no. You want someone devoted to the project, not someone who regards it as a passing hobby that they can tackle in-between episodes of Dancing with the Stars."-- Paula Pant, Founder, AffordAnything.com

8. Protect Your Most Valuable Asset

"Many entrepreneurs overlook their need for disability insurance even though their ability to earn an income is their most valuable asset. Stop thinking "it won't happen to me" and know that it could. (The Council for Disability Awareness has some great stats here). Ask yourself how your family would live without your income or what you would do for income if something happened to you. What are your options? Are you protected? (Note: Life insurance is also very important if there are other's dependent on your income)."--Mary Beth, www.workablewealth.com

9. Maximize Retirement Savings Options

"Those that are self-employed have significantly more options when it comes to retirement savings. Beyond traditional 401k and IRA plans, the self-employed should consider SEP IRAs, individual 401k plans, and even defined benefit plans. These alternatives enable entrepreneurs to save significantly more for retirement in tax-sheltered accounts. For example, a SEP IRA enables a self-employed individual to sock away up to $52,000 this year for retirement. With a defined benefit plan, some are able to save more than $100,000 a year in a tax-deferred account.

Some of these options can become quite complex. As a result, it's best for entrepreneurs to contact a tax or retirement specialist to understand which alternative is best for them."--Robert Berger, doughroller.net

10. Take Your Business On A Money Date

"Check in with your business budget often by establishing a money date ritual. Each week I take myself and my business out to lunch where I review my accounts, create reports, and update my financial goals. It makes doing mundane financial tasks like paying quarterly taxes, or putting together monthly reports, a lot more fun and less of a drag. I actually look forward to getting out of the office (and indulging in a sweet treat afterwards), where I list out positive business accomplishments that have occurred over the past week or so. A money date is the perfect opportunity to reflect on what you've accomplished, where your business is now, and where you're headed."--Carrie Smith, carefulcents.com

11. Seek Out Professional Tax Advice

"Spend some time and money on getting professional tax advice from someone who works with small businesses and entrepreneurs. There are many tax savings to be had if you know what to look for. On the flip side, you can get yourself into trouble very quickly if you don't know what you're doing. Critical areas to look out for include reporting income and expenses, home office deductions, hiring employees vs. contractors, and more. It's money well spent (and will often pay for itself!)."--Ryan Guina, Cash Money Life

12. Strive To Smooth Out Cash Flow

"Consider your personal finances like you would a business. A business has access to credit in order to smooth cash flow for various operations. As an entrepreneur, your income might be variable, so having some sort of mechanism in place to smooth cash flow in your personal finances makes sense. I have a low-interest personal line of credit connected to my checking account. If a client pays late, or if there are other problems, all of my automatic payments are made smoothly. Usually, when the money does come, I can then pay off the line of credit immediately--without ever paying interest. Smoothing out cash flow in your personal finances is just as important as smoothing it out in your business."--Miranda Marquit, www.MirandaMarquit.com

13. Keep Your Business Expenses In Line

"Don't go overboard with your expenses! There's this myth that expensing something magically moves the expense to a tax-free wonderland but the truth is you are still paying for the expense. With income coming in and a company credit card it's easy to let your profits slip away with small expenses. Run your venture lean and only spend on what you need for the business."--Glen Craig, Free From Broke

14. Negotiate Everything

"When it comes to business, make sure you negotiate everything. Contact your credit card processors, your suppliers...contact everyone and renegotiate your terms on a regular basis. Everyday, our business is constantly bombarded with new vendors offering their services at competitive rates. Make sure you strike a conversation and pit your existing vendors against the new ones and you can save tens of thousands of dollars a year."--Steve Chou, mywifequitherjob.com

There you have it--personal finance tips from the pros that will help you build the businessof your dreams. Remember, as most of these experts explained, success is all about striking a balance with your finances. If you are cheap, you're not going to get quality results, but if you're too extravagant, you're likely to end up in the red and ultimately fail. Be smart, be frugal, and put money into things that will grow and you will be well on your way to success.

Source: https://www.inc.com/murray-newlands/managing-your-personal-finances-as-an-entrepreneur-14-tips-from-leading-experts.html

15 Things Poor People Do That the Rich Avoid

In this video, Kris Krohn looks at 5 areas where poor people do things differently than the rich.

Ideas That Could Help You Reduce Life’s Expenses

Ideas That Could Help You Reduce Life’s Expenses

Life can be expensive at times. Whether you’re a frugal person or not, you most likely spend a lot of money every year on rent (or mortgage payments), utilities, food, gas, clothes, taxes, insurance, and a wide range of other essentials that are either necessary for your wellbeing or imposed by the government. These are necessary costs, but you can reduce the amount you spend on many of those necessities. The answer isn’t to simply stop treating yourself to luxury things; you can save money in that regard too. You just need to organise your finances. Here are some ideas that could help you to reduce the many expenses that life hurls at you.

Spend less on necessities.

One of the best ways to save money in life is to take a look at the necessities in your life and see where you can alter your budget. You obviously need to set aside enough money for the weekly food shop, but you might not need to spend as much as you currently do. You could search online for deals and discount codes that can be used at certain supermarkets. As for your energy bill, you could reduce that by unplugging any electronic device that’s not being used and even getting thicker glazing for your windows. You don’t have to sacrifice some necessities in order to save money; you just need to think of smarter ways to get the things you need.

Do some research before you make those big purchases.

Of course, everybody faces big costs in life. A new house, a new car, a college education, and other costly things are all essential aspects of life in the modern world. These are unavoidable things for the majority of people. Whatever your lifestyle, you’ll probably be faced with at least one such “big purchase” at some point in your life. It’s important that you, at the very least, do your research so as to save as much money as possible on those massive costs.

For example, you should always haggle when you’re house-hunting; never accept the asking price because most sellers will gladly accept something lower. The initial price is just a starting point. As for buying a new car, you should do some research on used car finance to see if you could get cashback or other deals on your purchase. Referring back to the first point, you can save money on necessities. A car might be essential for your travel, but there are cost-effective ways to go about buying one.

Put your money out of reach to cut back on non-essential expenses.

One of the best ways to reduce your expenses is to resist temptation. And if you put some of your money out of your reach then you’ll have less disposable cash to spend on things. You’ll still be able to treat yourself to meals out or nice clothes, but you won’t be able to splurge as excessively as you could if you kept all your money in your main account. That’s why you should regularly transfer money to another account. If you set up an automatic standing order that sends a portion of your income to your savings account every payday then you won’t have to worry about accidentally dipping into your excess cash. It’ll be out of reach. It’s a good way to teach yourself to be more fiscally responsible and reduce your luxury expenses.

Source: https://blog.themoneyshed.co.uk/ideas-that-could-help-you-reduce-lifes-expenses/

Millionaire Habits You Should Be Doing Now

Rachel Cruz shares some millionaire habits that you can start implementing today.

Easy Steps To Get Out Of Debt — Explained By A Certified Financial Planner

Are you struggling with high levels of consumer debt? Are you so stuck you feel like there's no way out?

Then this video is for you.

How to Make Informed Investments

Preparation is the name of the game. The Chicago Bulls would never have won six championships if it wasn't for the countless hours that Michael Jordan put in the gym throughout his entire life, and the endless game planning that he had undergone before every single game of his career. This kind of preparation, mixed with an unnatural athletic ability, was the reason that he had reached the level of success that he had. In the world of investing however, one does not need to possess any particular natural talents or abilities. The key characteristics of a truly successful investor include knowledge and preparation. Even the most experienced and successful investors in the world today are constantly searching for ways to improve themselves on a day to day basis. All of the best investors are not only informed on what industries to invest in and when, but also informed on what kind of position they are in at any given time, and aware of the best kind of investments for them at that particular moment in time.

Continually being conscious of your financial position during all points of your investing career and knowing yourself as an investor inside and out is crucially important when determining the level of risk that you should be taking on and when. If you are someone that finds themselves particularly interested in long term investments that will ensure a fairly moderate amount of return on investment, then there are a multitude of options for you. We all know that with the all-time low interest rates we are experiencing right now, savings accounts are not an effecting way of collecting interest at all.

Personally, I believe that the two best long-term investments include certificates of deposit (CD's) as well as bonds. CD's are just about as low risk as they come. These are especially nice because they are insured $250,000 by the FDIC, so as long as you are diversifying the CD's that you purchase, you're 100 percent certain that you will be receiving the promised amount of money back. By this I mean that when purchasing CD's you should open up multiple of them and never let them reach $250,000 before maturity if you want to be 100 percent certain of receiving the promised amount of money on time. They typically range between 6 month investments to 30 year investments. The longer away the date to maturity, the higher the interest rate on that particular CD. The best way to ensure a solid return on investment as well as a steady flow of income from a CD would be to have many different ones with a range of maturity dates that span from the short term to the very long term.

Article Source: https://EzineArticles.com/expert/Nate_Linder/2488597

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Paying Inheritance Tax in the UK

The current UK inheritance tax is a debatable subject among the taxpayers. Most of us think that a person who paid all the taxes on the earnings in his or her lifetime than the government has no right to levy the tax on that money for a second time once the person has died. This is the reason that this type of tax is also known as "Double Tax" since the possession is taxed two times. Because of this double tax, there are many people who disapprove it and are submitting a petition against the inheritance tax so that the government may drop this tax. If someone is in a position of obtaining any inheritance, then that person must know that, what inheritance tax is and how it is paid.

The inheritor must verify whether the tax on the inheritance is liable under the Inheritance (Provision for Family and Dependants) Act 1975 and Inheritance Tax Act 1984. Inheritor is not required to pay the tax on such inheritance, which is left by the late spouse. Every person can pass on £325,000 before their heirs pay inheritance tax, which is 40% on anything above that amount. This is called the inheritance tax 'nil-rate band'. If you're married, you can inherit any unused allowance from your spouse or partner. That means that married couples and civil partners can pass on £650,000.

If the inheritor is liable, then know how much tax will be levied. Beneficiaries are required to pay the tax on their inheritance share. Estate will owe tax at 40% on anything above the £325,000 inheritance tax threshold when a person die (or 36% if someone leave at least 10% to a charity). Dealing with it is one of the biggest thing you can do, as some simple actions can save you £100,000s.

How you can save paying huge amount of Inheritance Tax

Following is a simple and easy to understand guide to avoid inheritance tax:

First, choose the assets you want to be kept in trust. Mostly, Settlers decide to keep a small amount in the beginning and with time they continue to add more assets. However, you can also do a large contribution in the beginning as death can come any moment.

You must name your trustees. Trustees are those who decide the distribution of trust assets to the beneficiaries. In many jurisdictions, it is permitted to become trustee yourself but you will have to choose an independent trustee, one who is not from your extended and immediate family. If you fail to do so, the trust might be rejected by the court.

To avoid Inheritance tax you must hire trust solicitor who is well-experienced and can draft your deed of trust. This deed must state the name of the starting assets in trust, trustees, and beneficiaries. You must also clarify the roles and power of trustees; describe the rules for financial management, verify the decision making power of the trustees and verify the laws for the investment of the trusted assets. In the end, the deed must be notarised and signed to form the trust.

Start selling your own assets to the trust of your family over a period of years and slowly forgive your debts from the trust by using the notarised and signed papers.

Give something to friends or family members. A friend or a family member who is not your spouse or civil partner, so that you no longer get any benefit from it. It won't be taken into account when calculating the Inheritance Tax liability when you die.

Get expert advice on your inheritance and guidance in contesting a will, contact Going Legal Ltd today.

Article Source: https://EzineArticles.com/expert/Satya_Ranjan_Patra/313643

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