How budget tracking apps help independent contractors and small biz owners
Tracking your personal finances is hard enough, but when you add a business to the mix, it can become chaotic. While separating your personal and business accounts can help you manage your finances, budget tracking apps can optimize all processes of your small business.
Why do you need a budgeting app?
Budget tracking apps are helpful, even if you don’t own a business. However, they provide a whole host of benefits to small business owners and freelancers, especially if they pay quarterly taxes. If you don’t have an accountant, budget tracking apps are the next best thing.
Small business owners and independent contractors may find it hard to stick to a budget or set money aside for taxes. It may even be hard for them to plan for irregular pay periods. With a budget tracking app, you can plan for the unexpected and prepare for expected payments.
How can budget tracking apps help business owners?
Money management is a vital part of business ownership, whether you staff employees or go solo. Here’s how your startup could benefit from using budget tracking apps regularly.
Budget tracking apps help you track your finances
Accounting software and budget tracking apps are endlessly useful for their finance tracking abilities. Their most valuable features vary based on your needs and the tool you’re using, but all of them keep track of your money by integrating with your debit and credit card accounts.
Some apps even come with invoicing capabilities, so you can bill clients easier. Plus, you’ll get to use their tax calculation tools, which makes yearly or quarterly tax fulfillment a breeze.
Budget tracking apps help you set and stick to a budget
65% of Americans have no idea what they spent last month, so there’s a high possibility you don’t have a budget that helps you save money. On paper, budgeting is easy. Just spend less money, and you’ll save. In practice, most people end up spending more without a budget.
Why? Because the laissez-faire approach only works if you’re looking at your accounts and judging what you have left to spend. When you create a budget through an app, you force yourself to look at what you’re spending and saving, which helps you create financial goals.
Budget tracking apps keep your personal finances separate
Most startups know the cardinal rule of business: never mix your personal finances with your business. All business owners should abide by this rule because it’ll help you manage your cash flow, deductions during tax time, and stop you from accidentally charging the wrong account.
Budget tracking apps can help you create budgets that are unique to your circumstances. You can see what money is spent and where when you use the app’s user-friendly dashboard.
Budget tracking apps can prepare you for tax season
Tax season is a pain for self-employed individuals and businesses. Instead of one payment, most independent contractors and business owners have to make at least four. To make matters worse, they don’t have an employer that taxes their taxes out of their paycheck.
Whether you file self-employed or corporate taxes, it’s a good idea to keep 25-30% of your income strictly for tax fulfillment. Budget tracking apps can automatically take a portion of your wage out of your checking account, so you’ll always have enough money to pay the IRS.
Budget tracking apps can plan for irregular pay periods
Independent contractors and small business owners aren’t often financially stable. They either have irregular pay periods, seasonal dips, or low cash flow or profit margins. When you don’t receive a regular paycheck, you need to be more mindful of how much you’re spending.
A budget spending app can average what you spend on necessities per month and prevent you from overspending on lean months. This protects your business from financial difficulties.