Managing Your Money (continued)

Assignments

1. Run the numbers. Start penciling out your fixed and variable costs. Be honest about what they are and look for those extra expenses that may not be readily apparent on the surface. It’s those hidden costs that can sink you.
2. Think about deductions. Start to identify those items you use in the course of business that can be deducted. Some can be written off in the year you purchase them, which can lower your tax obligation that year. Others can be amortized over several years, allowing you to reduce your tax obligations for multiple years.
3. Talk to an accountant. A few hours with a tax accountant can save you tons of money. They will know what can and can’t be done on your taxes and make sure you are aware of any new obligations you may be responsible for since tax laws change all the time.
4. Open a business account. Separate your personal and business finances. You don’t want to use one to pay for the other, or you run the risk of an audit and being listed as a hobby business instead of a legitimate one. Get a debit and credit card for the business so you can use these to pay business expenses and also build credit for your business.
5. Budget mercilessly. It’s easy to live the big life when you’re a successful creative who has a business. But there will be times when you’re in a creative and financial desert. Look at your personal expenses and figure out what you can reduce or cut out if needed. Do the same with your business expenses, particularly the variable ones. Create a cushion so you don’t have to take on work you hate just to make ends meet. It’s far better to question where every dollar is going rather than wondering where the next one is going to come from.