{"id":4315,"date":"2014-12-23T17:11:00","date_gmt":"2014-12-24T01:11:00","guid":{"rendered":"http:\/\/blog.bidsketch.com\/?p=4315"},"modified":"2020-08-18T15:42:28","modified_gmt":"2020-08-18T22:42:28","slug":"fluctuating-income","status":"publish","type":"post","link":"https:\/\/www.bidsketch.com\/blog\/resources-and-tools\/fluctuating-income\/","title":{"rendered":"5 Budgeting Tips for Entrepreneurs Dealing With Fluctuating Income"},"content":{"rendered":"

\"irregularOne of the most difficult things I\u2019ve had to overcome as an entrepreneur is dealing with inconsistent income.<\/p>\n

Nothing is more frustrating than working hard the entire month and having nothing to show for it (or less than nothing) in your bank account.\u00a0<\/strong><\/strong><\/p>\n

It seems nearly impossible to create an accurate budget, project cash flow<\/a>, and grow your business, when you can barely make ends meet.<\/p>\n

So how can you get out of this vicious cycle, without working more hours?\u00a0<\/strong><\/strong><\/p>\n

Here are 5 budget tips I\u2019ve learned since becoming my own boss for the past 2 years.\u00a0<\/strong><\/strong><\/p>\n

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Open Separate Business and Personal Bank Accounts\u00a0<\/strong><\/strong><\/h2>\n

This is probably one of the easiest, yet most overlooked, tips for successfully dealing with irregular income. As an entrepreneur, most of your life and work is meshed into one.\u00a0<\/strong><\/strong><\/p>\n

But when it comes to your personal and business finances, these things need to be separated. Not just for your sanity (although that\u2019s enough of a reason) but also for ease of accounting and doing your taxes.\u00a0<\/strong><\/strong><\/p>\n

Here\u2019s why having separate bank accounts<\/a> can be so helpful:\u00a0<\/strong><\/strong><\/p>\n

Simplify monthly business reports. <\/b>By opening a separate business account, you can use it to link your bookkeeping software, which makes creating business reports, calculating quarterly taxes, and yearly financial statements, a breeze. You won\u2019t have to worry about excluding personal transactions from the business ones while categorizing them.\u00a0<\/strong><\/strong><\/p>\n

Prove income to the IRS or lender. <\/b>If you\u2019re ever audited, you can prove your business is legit much more effectively, since it\u2019s treated like it\u2019s own entity. You also won\u2019t have to worry about a lender, or the IRS, sifting through your personal transactions.\u00a0<\/strong><\/strong><\/p>\n

Outsource bookkeeping tasks. <\/b>Another advantage comes during tax time in the event you don\u2019t have the time or resources to create year-end reports yourself, you can easily hire a bookkeeper or CPA. If your accounts are combined, you\u2019ll either have to manually create the summaries, or let a bookkeeper sift through your personal account. That\u2019s more time, more money, and less privacy.\u00a0<\/strong><\/strong><\/p>\n

Pay Yourself a Regular Salary\u00a0<\/strong><\/strong><\/h2>\n

The key to dealing with irregular income as a business owner is to mimic a regular income schedule as much as possible. Similar to a traditional job, that pays you every Friday, or at the beginning and middle of each month, you should make frequent, and regular, transfers into your personal and business bank accounts.\u00a0<\/strong><\/strong><\/p>\n

Set yourself up like an employee of your business (even if you\u2019re a sole-proprietor), for the purposes of accounting.\u00a0<\/strong><\/strong><\/p>\n