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Financial Management 101: Business Owners, Are You Doing Your Homework?

June 13, 2023

As a business owner, prudent financial management can help ensure your business remains healthy and
stable. But what does good business financial management look like in practice? Here are four tips that
may benefit business owners while focusing time and effort on the core of the business.

Pay Yourself First
Although it is tempting to sink all your profits back into your business operations, especially for very
young businesses, paying yourself first may help you better understand the revenues your business
needs to generate to remain profitable. And if your business ultimately does not work out, drawing a
salary throughout its life may ensure that your hard work had a purpose and served to improve your life.

Take Advantage of Loans
You may be reluctant to take on debt for similar reasons that you may want to eschew a salary—you do
not want to have any loan obligations you may not be able to repay.
Nevertheless, loans may help manage challenges, especially when you are in a startup phase. The
proceeds from loans may help you pay personal expenses, purchase inventory or equipment, and hire
additional employees, allowing your business to grow more quickly. When you utilize loans effectively,
you may be better able to generate the cash flow needed to repay them.

Spread Out Your Quarterly Tax Payments
Sometimes, it might be tough to come up with the funds needed to make quarterly estimated tax
payments on the dates these payments are due. In these situations, paying your tax payments on a
monthly basis may make it easier to fit these payments into your budget. The amount you pay monthly
may be less difficult than having to have a much larger amount when it is time for quarterly payments.
By simply adding a line item for taxes to your monthly budget, you may manage the stress that arises
from having to come up with tax funds every few months.

Evaluate Investment Expenditures and ROI
Not all investments are clear winners. Without data, it might not be easy to see this. By measuring your
expenditures plus your return on investment (ROI), you may see where your money deploys and
whether it works as it should. Periodically evaluating your investments may help you discover ineffective
methods and allow you to recommit to marketing efforts and other investments that are paying off.

Important Disclosures:
The opinions voiced in this material are for general information only and are not intended to provide
specific advice or recommendations for any individual.

Investing involves risks including possible loss of principal. No investment strategy or risk management
technique can guarantee return or eliminate risk in all market environments.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that
you discuss your specific tax issues with a qualified tax advisor.
This article was prepared by WriterAccess.
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