If you’re running your own at-home business, odds are it’s a labor of love. After all, you’ve escaped the rat race and figured out how to earn your keep doing what you enjoy. For many home-based business owners, that’s a dream come true.
But just because your business is your baby doesn’t mean it’s not still a business.
And if you want to keep making money by pursuing your passion for years to come, then it’s imperative that you attend to your business’s financial foundations first.
Starting Out With a Realistic (and Complete) Budget
It can be easy to underestimate the costs associated with an at-home business. Just because you don’t have the rent and overhead of a physical store or office space doesn’t mean you won’t have to shell out a pretty penny to keep the operations flowing.
No matter the actual size of your business, one of the largest expenses you’re likely to encounter is payroll.
Even if you’re currently a workforce of one, you’re still going to need to eat, keep the lights on, and pay the household bills — and that means you’re going to need to pay yourself something on the regular.
It’s also likely that you’re going to want to grow your business, so you’re going to need more workers than just me, myself, and I. Budgeting for your business’s payroll, though, will depend very much not only on how many workers you take on but also on what type of worker they are.
For example, you can cut down on payroll expenses significantly if you hire contract workers rather than full-time employees.
Most contractors work on an as-needed basis, meaning that if the work orders slow down, you won’t have the burden of paying for regular workers you temporarily can’t afford.
Best of all, contractors can bring skills to your business that you didn’t know your company needed, all without the financial risk that recruiting, training, and employing a regular W-2 worker can entail.
For instance, you might outsource temporary projects to contractors to save on your overall operating expenses while expanding your company’s outreach and improving its performance. A contractor could be brought in, for example, to build or upgrade your company’s website or to install a new data security system.
Once this work is done, your company can easily recoup the financial outlay of hiring a temporary worker.
The Tax Man Cometh
Anyone who has operated an at-home business knows the critical importance of organization. After all, if you spend half your workday looking for materials that should be conveniently easy to find, you’re losing both money and productivity.
When it comes to your business finances, staying organized doesn’t just help with efficiency, it can also protect your company both financially and legally.
Keeping meticulous and well-organized financial records, for instance, will help tremendously with your business accounting and may well keep the tax man (or woman) away.
Likewise, detailed records of revenues and expenditures can help you track and monitor your business performance, and real-time financial data can be instrumental in making informed decisions to protect and grow your business.
That means that not only should you have a dedicated space for doing your work, but you should also have dedicated systems for storing, accessing, and protecting financial records.
Ideally, for instance, you’ll have duplicate records, such as physical files as well as digital files stored on secure devices and perhaps even in the cloud.
Hire a Financial Advisor
For many at-home business owners, managing your company’s finances can be an intimidating and overwhelming process. After all, in addition to doing the work you love and trying to keep your business afloat and your customers happy, you also have to see to budgeting, expenses and income, and taxes.
That’s a lot to deal with, but it’s also critically important. Without sound financial management, your company isn’t likely to last very long. For that reason, hiring a financial advisor can make good business sense.
Yes, it may seem like an added expense or a luxury you can’t afford, but with the right person, the costs now can pay off exponentially in the future.
Indeed, a good financial advisor can help you take your business to the next level, helping you navigate through the treacherous first years when so many small enterprises fail.
Owning an at-home business is a dream come true for many of us. But when you find a way to make a living doing what you love, you want to do everything in your power to protect it.
That means attending to aspects of your business that may not be the most glamorous but are often the most essential. Among the most important is ensuring that your business’s financial foundations are sound.
From making a realistic and comprehensive budget to maintaining meticulous records to recruiting a qualified financial advisor, there are many steps you can take to secure your company’s financial future.
Dan Matthews is a freelance writer with a penchant for financial wisdom and solid research. You can find him on Twitter @danielmatthews0 and LinkedIn.
Josh founded Money Buffalo in 2015 to help people get out of debt and make smart financial decisions. He is currently a full-time personal finance writer with work featured in Forbes Advisor, Fox Business, and Credible.