Stepping up to become an entrepreneur requires putting yourself onto a platform where you can take financial risks on your own to earn profits for your firm. It requires lots of courage and motivation to build a firm at the initial stage of your career, even though sustaining the same throughout your lifetime is also a much bigger task.
While planning to start a business of your own, you need to plan your budget first. However, reviewing your plan and making changes in it from time to time is necessary and you must do it as when required. Always have a flexible approach to achieving your goal, do not keep stringent policies which may become an obstacle towards the growth of your employees and firm as well.
Here are a few things to consider while planning for a start-up:
It is necessary to manage your cash inflow and outflow. Know your working capital – daily operational cost in running the business has to be maintained separately. Start maintaining your accounting ledger which will keep a track record of your financial transactions for the lifetime for your company. Whenever you need to check your previous records, you can easily do it checking the ledger. Every day’s income inflow and outflow have to be managed properly because it helps you to grow your business further by the booking your profits.
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Once you open a firm, you need to pay several taxes every year and the tax assessment is not as simple as assessing an individual. You need to keep in touch with your chartered account to know the tax implications. There are a number of taxes which you need to pay like sales tax, service tax, corporate tax, income tax and various other surcharges. Pay your taxes on time, otherwise, you may have to pay some extra charges as a penalty for paying late which may affect your cash flows.
The way you get insurance for yourself, In a similar way, you need to take insurance for your firm. Take an insurance which provides cover for your employees, your firm, and your assets which can be financial or non-financial. There are several general insurance companies through which you easily avail the insurance for your firm. But then, pay your premiums on time.
Investment should be done in such a way that can help your money grow with time. You need to invest wisely in physical assets. Make sure that you are unnecessarily not investing too much in infrastructure unless and until that is specially funded to you from some other sources. Profit booking is a must. As a starter you should book your profit and invest some portion of it on monthly basis for a longer time horizon so that once you want to expand your business at a larger scale, you do not fall short of funds. Moreover, you will not need to take a big loan for building your business.
An investment can properly be done only if you maintain your income-debt ratio from the beginning of your start up.
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There can be ups and down in your business. Every time you may not earn the same profit. To maintain an even distribution of income, you need to have an emergency fund. It means that you need to have surplus funds in cash or liquid funds in order to meet the uncertain expenses which may occur due to medical exigencies or non-medical exigencies. These funds are needed to be maintained as per your monthly expenses. While running a business you must keep at least 6 months additional cash in a savings or liquid fund account.