Now you have decided to make the giant step into owning your own business you need to decide if you want to continue doing things alone (sole ownership) or with someone else (partnership).A partnership is much more than just dividing up the work and the profits, it’s also about taking advantage of each individual’s strengths. A partnership can be very satisfactory if it works well, but emotionally draining when they aren’t working right. What ever legal structure you decide upon will determine your taxes and personal liability. The best recommendation I can give here is to seek professional advice.
When you set up a business, one of the biggest concerns is the finances. Many craft businesses are started as a sideline career or an extension of a hobby and therefore require little capital investment (like Butterfly Crafts). But if you plan to work full time on your new business, many business advisors recommend that you save up twelve months of living expenses – just in case!
You really should not use your personal savings for your business as all business related expenses should come from your business account. At first be prudent with your spending and keep your overheads low. I have recently imposed a shopping ban on myself and to “use what I have” so that I can reinvest any profit I make. There are ways to save money on other aspects of your life though. Remember that you have an inner domestic goddess who really does know how to cook rather than dial for takeaway and obviously, hand make your gifts instead of buying them!
For me, book keeping is the least exciting task as a business owner but it is so important to have an effective record-keeping system. Keep copies of invoices, bills, cheques and receipts and file them. I bought a little expanding file with 12 compartments that I file things in by the month. With a little bit of thought and organisation, the way you run the financial side of things and file records will help in the long run at tax return time!
For me, book keeping is the least exciting task as a business owner but it is so important to have an effective record-keeping system. Keep copies of invoices, bills, cheques and receipts and file them. I bought a little expanding file with 12 compartments that I file things in by the month. With a little bit of thought and organisation, the way you run the financial side of things and file records will help in the long run at tax return time!
Coming next time: Your style & products
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