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In today’s competitive market place, implementation of money-saving, efficiency-boosting small business tips can be the difference between profit and loss. Though my wife and I are young entrepreneurs, we have learned many important lessons over the past few years.
In July, my talented and hard working wife, Mrs. Superhero, shared a guest post, 10 Tips for Self-Starter Entrepreneurs. To date, it remains one of the most-popular articles on FinanceSuperhero.com. In the past two months, I have received many follow-up questions and requests for further advice based upon the tips shared in the article. In this post, I will share 5 additional tips which will aim to build upon the advice previously shared.
Simple Small Business Tips
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According to the U.S. Small Business Administration, 28 million small businesses in the U.S. account for 54% of sales while also providing 55% of all jobs since the 1970s. Small businesses, regardless of their size, are a major player in the American and even global economy. Launching a small business is relatively easy, yet building and sustaining a successful business model can be challenging.
Without further adieu, here are 5 additional small business tips to save you money and boost efficiency.
1. Structure Your Small Business To Protect Yourself
On the surface, this suggestion appears very obvious. However, in the midst of other start-up activities, consideration of legal structure for a new business is often placed on the back burner.
For many new businesses, in particular those run by sole proprietors, operating under a DBA (“doing business as”) arrangement may suffice. The advantage in doing so is simple: minimal costs and typically simple tax returns. However, operation as a sole proprietor may increase exposure to liability.
In order to minimize exposure to risk and liability, the formation of a corporate entity, such as an LLC (limited liability company), may be advisable. This process can be expensive and time-consuming, which leads most experts to recommend holding off on this process for a short time.
However, for those wanting to take this step, INCFILE.COM offers a simple and affordable process to do so. In my home state of Illinois, the package rate for forming an LLC begins at $49. The Illinois Secretary of State also charges a $500 LLC registration fee.
How does forming an LLC save you money? By taking legal steps to limit your overall liability, you are protecting your personal assets. For example, if you are a musician, forming an LLC may be a wise move to protect valuable assets, such as antique grand pianos, professional-quality string and woodwind instruments, and other valuable equipment.
The scope of this article does not allow a full discussion of the merits of DBA and LLC designations. For more information on this topic, I recommend further reading on the topic.
2. Track Your Mileage
If your business requires frequent driving to meet clients, you could be missing out on significant tax savings. For 2016, the IRS established a rate of $0.54 per mile. Please note the following:
*If you are tracking your mileage, you may not also use any depreciation method on your vehicle. This will surely trigger the alarms at the IRS.
*In lieu of tracking mileage and claiming this deduction, you can choose instead to track the actual costs of operating your vehicle in a business capacity. This can be more complicated, which leads many business owners to track mileage instead.
If you prefer tracking mileage, I highly recommend utilizing an app such as MileIQ to streamline the process. In August 2016, I used it to track my mileage for my real estate business. The app classified 265.2 miles of business driving, a value of $143.23. It worked in the background on my iPhone without requiring any prompting or effort on my part.
The app is very intelligent and intuitive to use; drives can be classified as personal or business with a swipe of your finger, and frequently-driven routes may be auto-classified, based on your preferences. You can download mileage reports in Excel or PDF format at any time, which makes record keeping very easy.
If you will be classifying 40 or fewer drives per month, you may use the app at no cost! Beyond that, the paid version offers tremendous value when the time saved on tracking mileage in a manner detailed enough to satisfy the IRS is considered.
As an added bonus for FinanceSuperhero readers, if you sign-up for MileIQ using this link, you will save 20% on the regular annual rate of $59.99.
3. Keep an Electronic Calendar
Few mistakes can be as devastating to your business’s reputation as missing an appointment or failing to follow-up with a client. Depending upon your specific business, the “What Have You Done For Me Lately?” mantra remains very applicable.
In order to make sure we do not miss appointments for our side jobs, Mrs. Superhero and I maintain a free shared Google Calendar. The app is very user-friendly, simple to maintain, and allows for event notifications to be established via e-mail or text. Our shared calendar allows us to stay on the same page, balance priorities in a centralized location, and avoid double-booking ourselves.
4. Maintain Accurate Records For Free
While many small businesses may prefer their tried and true use of programs such as Quick Books, many free, user-friendly alternatives are available today. I have created Excel templates which I utilize to organize all income and expenditures for Mrs. Superhero’s music studio, but I may soon look into alternatives to streamline my processes.
One promising alternative is Wave, a free accounting software platform designed specifically for small businesses with fewer than nine employees, independent contractors, and sole proprietors. The interface allows users to track sales/income, expenses, create and manage invoices, and scan receipts – all for free! It syncs with your business accounts to eliminate the need for manual data entry, generates professional accounting reports (accounts receivable, accounts payable, balance sheets), and creates invoices with ease.
For a small cost, payroll and credit card processing are also supported. Simply put, there is a reason why over 1.7 million people use Wave today.
5. Utilize Amazon Prime to Save
If you are a lean enterprise (think sole proprietor), chances are you spend a great deal of time running errands and picking up last minute items. This also wastes earning potential. After all, time is money!
I highly recommend an Amazon Prime membership in order to minimize wasted time and improve your efficiency. With Prime, you receive free two-day shipping, no minimum order size, and also will enjoy access to streaming music and video. You can establish recurring orders for items which you need regularly, such as ink, paper, envelopes, and a variety of other office supplies using the Subscribe and Save or Amazon Dash programs – no more last minute trips for office supplies!
If you’re on the fence, I recommend taking advantage of the Amazon Prime Free 30-Day Trial, which can be cancelled at anytime.
By following the five small business tips above, you can improve the efficiency of your business and save money. They will free up your time to focus upon prospecting, improving your services, and meeting the needs of your clients.
What small business tips do you recommend? Which of the small business tips mentioned above do you implement?