How Much Does A Small Business Owner Really Make?
If you are a small business owner, you probably have a financial target in mind. This target is the amount of money that you would like to make. However, meeting that goal can be harder than you think. The reason is that much of your money will be swallowed up by the business overhead. Many small business owners do not fully understand the financial side of business ownership, so provided here is a guide to determining how much money you actually have.
How Much Do You Bring In?
In order to start figuring out how much you make, you will first need to figure out how much you bring in. If you have a good bookkeeping system, this should be fairly easy. However, if your bookkeeping system needs work, you may not have a clear idea exactly how much money the company brings in each month.
If your books are out of control, consider hiring outside help. A Virtual Assistant firm such as IAC Professionals can get your bookkeeping back on track. Your VA can also handle a variety of other paperwork tasks, and can be used only when needed.
Once you have determined how much money your business brings in, you will need to determine how much the company spends each month.
How Much Do You Spend?
At this point, you should focus only on your business-related expenses. Your personal expenses should come out of your pay, just as they would if you worked for someone else. Office rent, your company vehicle, software, business phone calls and memberships in professional organizations are just a few of the costs of running a business. You also need to subtract insurance costs, including liability, health and life insurance.
Freshbooks
Once your bookkeeping records are well-organized, it should be fairly easy to determine your set monthly business expenses. Your next step is to subtract your expenses from your income. In theory, the result is your monthly personal income. However, it is not quite that simple. If you are still building your business, you will want to invest a certain amount of your profits back into the company. From software upgrades to building improvements, most small businesses have a backlog of projects that are awaiting funding. Determine how much, in either percentage or hard dollar amount format, you want to reinvest each month.
Determine Your Goal
Only by going through the above steps will you begin to develop a clear picture of how much money you make. Of course, the best you will be able to come up with is an estimate, as most small businesses experience rapid fluctuations in income. Over time, however, you will be able to see patterns and averages. At this point, you can set realistic financial goals and begin working to achieve them.
If you have any questions about how much a small business owner really makes, contact us today.
IAC Professionals is a single source for contracting qualified professionals to assist you with your most critical business needs. They offer a wide range of outsourcing solution which include Accounting, Bookkeeping, Virtual Assistants, Company Formation and Business Consulting.
How Much Do You Spend?
At this point, you should focus only on your business-related expenses. Your personal expenses should come out of your pay, just as they would if you worked for someone else. Office rent, your company vehicle, software, business phone calls and memberships in professional organizations are just a few of the costs of running a business. You also need to subtract insurance costs, including liability, health and life insurance.
Freshbooks
Once your bookkeeping records are well-organized, it should be fairly easy to determine your set monthly business expenses. Your next step is to subtract your expenses from your income. In theory, the result is your monthly personal income. However, it is not quite that simple. If you are still building your business, you will want to invest a certain amount of your profits back into the company. From software upgrades to building improvements, most small businesses have a backlog of projects that are awaiting funding. Determine how much, in either percentage or hard dollar amount format, you want to reinvest each month.
Determine Your Goal
Only by going through the above steps will you begin to develop a clear picture of how much money you make. Of course, the best you will be able to come up with is an estimate, as most small businesses experience rapid fluctuations in income. Over time, however, you will be able to see patterns and averages. At this point, you can set realistic financial goals and begin working to achieve them.
If you have any questions about how much a small business owner really makes, contact us today.
IAC Professionals is a single source for contracting qualified professionals to assist you with your most critical business needs. They offer a wide range of outsourcing solution which include Accounting, Bookkeeping, Virtual Assistants, Company Formation and Business Consulting.
Author Info:
IAC Professionals 1-786-214-6046 1.877 MY-IAC-VA cindy@iacprofessionals.com IAC Professionals.
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