Money management strategies for the self-employed

Help streamline your budget and build a stronger financial future for your business with these tactics.

A self-employed man reviewing his business strategies at his desk.

Starting a small business and being self-employed is exciting but requires a lot of time and work. There are many hats or titles a self-employed person can wear on any given day. Chief marketing officer, sales manager, customer service department head, accountant, to name a few.

Multi-tasking, juggling multiple priorities, poor cash flow and the general lack of time/energy are the primary reasons that small businesses don’t thrive. Here are a few business strategies to help your business run smoother.

Separate personal from business

It’s tempting just to use existing personal credit cards and bank and savings accounts for business uses, particularly as you’re getting started. But a separate setup for business income and expenses helps delineate the two, simplifies tax preparation and may help to reduce personal liability.

Consider multiple accounts for your business

One tip for accommodating different business needs — taxes, operating expenses, an emergency fund — is to find a financial institution that allows you to have linked yet separate accounts or funds. Once you do that, automatically divvy up every invoice payment as needed into various accounts.

Figure out a digital record-keeping system you like

What works for you may not work for someone else, so review the options in software programs to find out what fits your accounting style. Some have a small monthly fee but allow you to generate branded invoices and offer payment collection and tracking, account reconciliation and custom reports for tax purposes.

Create an expense tracking routine

It’s imperative to record your business expenses to help reduce your tax burden, but it’s also imperative to maintain accurate records. Save receipts and statements and consider a quick-scan program to keep digital copies as well. Use your digital record-keeping system to collect data and find a tool that helps you track business-related mileage.

E-pay and e-invoice if you can

Switching to these options help you get in the habit of immediate billing and allow people to efficiently send you money. In addition, many online processors integrate with most bookkeeping or invoicing systems to allow for seamless record-keeping collection.

Consider using a tax professional

When you are working for yourself, taxes can be confusing and tricky, involving not only Social Security and Medicare, but 1099s, itemizing and quarterly payments too. Investing in the services of an expert may pay off by saving you time and reducing the possibility for mistakes and fines.

Review your insurance needs

There are many questions you should ask regarding your business and personal insurance coverages. What would you do if you were sued? What if you couldn’t work for a month? What will happen to your business when you die? Contact a State Farm® agent to review coverages such as workers’ compensation coverage, commercial umbrella insurance, disability insurance, life insurance, business and professional liability insurance, health insurance and more.

Save for retirement

There are retirement plan options every business owner should consider. Many self-employed people do not have a plan. Take time to review which retirement savings plan option would be best for you.

Plan for the unexpected

What will happen to your business after you are gone or if you become disabled? Business continuation is an important topic to consider for most small business owners. A will or trust does not always address the central problems created when this happens. This is particularly important when there are stockholders or other people that have an interest in your business.

The information in this article was obtained from various sources not associated with State Farm® (including State Farm Mutual Automobile Insurance Company and its subsidiaries and affiliates). While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. State Farm is not responsible for, and does not endorse or approve, either implicitly or explicitly, the content of any third party sites that might be hyperlinked from this page. The information is not intended to replace manuals, instructions or information provided by a manufacturer or the advice of a qualified professional, or to affect coverage under any applicable insurance policy. These suggestions are not a complete list of every loss control measure. State Farm makes no guarantees of results from use of this information.

Neither State Farm nor its agents provide tax or legal advice.

State Farm Mutual Automobile Insurance Company
State Farm Indemnity Company
State Farm Fire and Casualty Company
State Farm General Insurance Company
State Farm Mutual Automobile Insurance Company
State Farm Life Insurance Company (Not licensed in MA, NY or WI)
State Farm Life and Accident Assurance Company (Licensed in NY and WI)
Bloomington, IL

State Farm County Mutual Insurance Company of Texas
State Farm Lloyds
Richardson, TX

State Farm Florida Insurance Company
Winter Haven, FL

Start a Quote
Select a product to start a quote.
Agents Near You
Contact Us

Also important

Strategic Small Business Startup Tips

Tips to help you remove some risk from starting your small business.

How To Do Small Business Inventory

Keeping track of your items is vital for the success of a small business.

Related articles

What are the Best Small Business Retirement Plan Options?

Offering a retirement plan, including a SEP IRA, SIMPLE IRA or a 401k, is a great way for a small business to attract and retain employees.

Are Mobile Credit Card Readers Good for Small Businesses?

Smartphone credit card readers offer small businesses flexibility and mobility when processing customer purchases. Read more.

4 Ways to Protect Your Business Property From Damage

Simple tips to tighten security and prevent electronic and water damage.