From Cash Flow to Credit: Why Money Management Matters for Business Funding
Starting and running a business requires not only passion and determination, but also effective financial management. One key aspect of financial management for business owners is money management, which involves managing your business's funds strategically and responsibly. Proper money management is crucial for business success, especially when it comes to securing funding to support your business's growth and expansion. In this blog post, we will delve into the importance of money management for business funding, including the significance of using your business Employer Identification Number (EIN) instead of your Social Security Number (SSN) for business funding.
One of the main reasons why money management is crucial for business funding is that it helps you maintain a healthy cash flow. Cash flow is the lifeblood of any business, as it allows you to pay bills, invest in new opportunities, and cover unexpected expenses. Effective money management involves keeping track of your business's income and expenses, creating and following a budget, and making informed financial decisions. By maintaining a positive cash flow, you are in a better position to secure funding from lenders or investors, as it demonstrates that you have a handle on your business's financials and are capable of repaying borrowed funds.
Another critical aspect of money management for business funding is managing your business credit. Your business credit score plays a vital role in determining your eligibility for business loans, lines of credit, and other forms of funding. A good credit score signifies that your business is creditworthy and has a history of repaying debts on time. It also demonstrates that you have a track record of responsible financial management, which lenders and investors view as a positive indicator of your business's ability to handle borrowed funds. Proper money management involves paying your bills and debts on time, avoiding unnecessary debt, and regularly monitoring and improving your business credit score.
When it comes to business funding, it is also crucial to understand the significance of using your business EIN instead of your SSN. Your EIN is a unique nine-digit number issued by the Internal Revenue Service (IRS) to identify your business for tax purposes. Using your EIN for business transactions, including applying for funding, provides several benefits. First, it helps you establish separate business credit, which is separate from your personal credit. This means that your business's creditworthiness is evaluated based on its own financials, rather than being tied to your personal credit history. This can be especially beneficial if you have a limited personal credit history or a less-than-perfect credit score.
Second, using your EIN for business funding helps protect your personal assets. When you use your SSN for business transactions, such as applying for a loan, you may be personally liable for the business's debts if it defaults. This means that your personal assets, such as your home or personal savings, could be at risk. On the other hand, using your EIN separates your personal and business finances, helping shield your personal assets from potential business liabilities. This can provide you with greater peace of mind and financial security as a business owner.
Finally, using your EIN for business funding helps establish and maintain a professional image for your business. It demonstrates that you are running your business as a separate legal entity and are committed to proper financial management. This can positively impact how lenders and investors perceive your business and increase your chances of securing funding. It also helps you build a solid business credit history, which can open doors to better funding opportunities and favorable terms in the future.
In conclusion, effective money management is crucial for business funding. It helps you maintain a healthy cash flow, manage your business credit, and establish a professional image for your business. Additionally, using your business EIN instead of your SSN for business funding offers several advantages, including establishing separate business credit, protecting your personal assets, and enhancing your business' chance of securing funding. It is smart financial practice that can benefit your business in the long run, providing you with the financial resources and protection needed for business growth and success.
The blog post "Breaking the Cycle of Poor Credit: How Money and Debt Management Can Help Secure Business Funding" delves into the challenges individuals face when seeking business funding, particularly when personal collateral is required. The author shares their experience of sitting in on a business funding zoom meeting and the alarming number of people who were dismissed because they couldn't use their personal credit as collateral. The post highlights the importance of money management, debt management, and cleaning up one's credit as critical factors in securing business funding. Additionally, the post discusses alternative funding options such as crowdfunding, grants, and small business loans. The author also emphasizes how credit, money management, and debt management all correlate with each other and provide strategies for improving all three areas. The post aims to educate readers on the importance of these topics and encourage them to take the necessary steps to secure funding for their business.
So…The year is coming to a close and like most people, we are re-evaluating our finances and starting to prepare for 2023. While some of us may have already found ways to make 2023 better, some of us are still trying to create our financial goals for 2023. In this series, we are going to talk about checking your credit and debt health so you can move into 2023 with a plan or start working on your goals to become credit-worthy or into debt cleanliness.
Man, what a year! Can I say I am ready for 2023??? This year has been very challenging and after much thought and deliberation, I came up with one realization; I need to get my ish together. With that being said, I started planning out things that I am going to do to ensure that I am placing myself in a position to be the best version of me for 2023. Because my life is so extra, I have had to break it down into categories. I know I am not the only person that needs a revamp, so I thought I’d share my journey with you! Maybe the things that I do will help someone or give you the inspiration to do something for yourself! So, here it goes… Today we are going to tackle my personal and general household mess…lol. So recently I’ve had a set of twins and honestly, my entire world has been turned upside down! I feel as if I am behind the rat race. I am being transparent when I say that I feel as though my entire house feels as though it is in shambles so, this is my honest attempt to make some adjustments in hopes that I can create some peace within myself and my home. So, let’s start with the personal areas I would like to tackle: Mental and Emotional Health. Being a mother of 6, one of the things I want to make sure and remember is that I need to take time for myself and not always thinking of only doing things for others. With the help of a plan I’ve developed, I’ll be able to concentrate on completing three things for my mental health each month. Some of the options that I’ve come up with for this are writing what I am grateful for daily, finding time throughout my day to meditate and track having no negative thoughts or self-talk for 7 days. Additionally, reflect on what went wrong in 2022 and think of ways to make a change for 2023. Last but not least, practice more self-love; maybe read some self-help books and take a mental health day at least once a month. Physical Health. So, with a set of newborns on my hands, I’ve had little time for this department, I went from running or walking 4 miles a day to barely making 500 steps. But beyond that, I have other things I need to work on. Because I am so out of whack, I have a few options I would like to get back in gear for 2023. We all know that healthy disciplined habits start with food so preparing healthier snacks and eating more healthier well-proportioned meals will be my very first bridge to cross. My next to-do will be to get enough sleep. Now my boys sleep very well usually from 8pm to 3am the following morning, then from 4am to at least 6 or 7. However I’m always up doing something or the other instead of taking my already exhausted butt to bed. Moving forward I would definitely try to get at least 6 hours of sleep a night. Other things to work on are walking at least 6000 steps a day, minimizing bad eating habits, set goals for losing some of this baby weight and continuing to drink plenty of water. Educational Health. I ’ve long wanted to go back to school for something and finally, I’ve made up my mind. Take the time to find a paid or free course that speaks to you; that makes you a better you. Looking to change your career? Find a course that is offered for free that tells/showcases what your new employment opportunity is. These are the ones I would like to tackle in the next few months but of course there are other lifestyle goals that we can try to tackle such as environmental, career, relationships, financial and hobbies and fun goals. Which one stands out to you as an area that you’d like to improve? Now the next hurdle to cross is my household. It may have the smallest section in this post, but I promise you, it is the most extensive of the 2 points we’re discussing today. Whether you have 1 child or 8, cleaning is something that is never over. So, you must know that it is seriously an impossible feat trying to keep a house clean and well put together with 6 kids. As the months went by, I realized that some deep cleaning is required. Before the year is up, there are a few things I would like to get done. Some of my to-dos include purging rooms, deep cleaning and keeping up and maintaining our home after all of the hard work is done! Now my OCD won’t let me be great, so every major to-do needs to be written down, accounted for and checked off a list. My plan is to tackle each room at a time until I get everything cleaned and put together to my specifications. I've created this printable to make sure I do everything I need to do in each room and stay focused. If anything needs to be purchased, a list will be created to host all of my items for purchase. I am sharing this printable with you and hopefully it can help you get organized before the new year as well! With that being said, please comment below and tell me what you are going to go for yourself personally and also what are you going to do to get your home in order all before the new year begins. In the meantime, are you prepared for Credit and Debt, the next topic in our series? Keep an eye and ear out!!!
As we move into the month of October, we realize that the only way we can get things done is by setting goals and making an honest attempt to crush them! While you're probably still trying to find work and life balance, we figured we'd share some business goals to help you crush the remainder of this month, (leaving you more life to live, for the upcoming holidays.) Sssssoooo..... Let's Go!!! 1. Get a new certification. Have a new course you are dying to complete? Have a class that can help you propel your business or allow for you to be able to explain things better to customers? Start taking that class in the month of October and hopefully you can complete it before the year is over! Good luck! 2. Hire workers. Is your business going through a transition? Do you need more help in the office, or due to the increase in business? If so, here is your chance to hire your desired help. Take time to seek out help that suits the needs of your business while also staying within any budget that you may have created for such assistance. 3. Complete open tasks/assignments/ projects. Do you have open projects, tasks or assignments that you have not completed for clients? Can you complete them before the end of the month? Now is your chance to put your best foot forward! Try your very best to complete any open work before the end of the month. The end goal is to close as many open accounts as possible before the end of the year and with only a few months left to go, this is a great time to shoot for the stars and close as many accounts as you can. Remember, work efficiently to continue to maintain the integrity of your work standards! 4. Network. Want to connect with more people within your niche? Try to make an effort to attend events that support businesss networking. Whether a social mixer, a pop-up shop or even a meeting at your Chamber of Commerce, find ways to link and conect with other business minded people like yourself! You'd never know what you can learn from them; or them from you! 5. Increase your presence on Social Media. How is your following on social media? Are you engaging with your audience? Try creating a reel or a story or just a simple post! Want to get more followers or advertise an ad you are promoting? Try their marketing options through the social media ad sections. Of course, there are other goals that you can try such as: - Email Marketing Goals - Sales Goals - Engagement Goals - Financial Goals - Growth Goals - Marketing Goals - Time Management Goals - Productivity Goals What goals are you setting for the month of October?
Here is what you should look for to file for 2020: If you received unemployment: you will be issued a Form 1099-G from your State Government. Like a W2, it should be received before January 31st. It will include all earning and taxes withheld, if any, for the unemployment received in 2020. If you pulled funds from your Retirement: you will be issued a Form 1099-R from your Retirement Company, also like a W2, it should be received by January 31st. It will include all funds withdrawn throughout the 2020 year, and any taxes withheld. Helpful Tip... when receiving unemployment always have taxes withheld, when possible. It's not too late to make the change to have taxes withheld and it will help reduce how much you may owe. Need to Know... if you withdraw from your retirement early, you can't avoid the early withdrawal penalty, even if you have more taxes withheld. This will help with how much you may owe in taxes, but the penalties are calculated during the filing of your taxes, so only have the minimum amount of tax withheld and save some of your funds, if possible, in case you owe.
Honestly, I know everyone has their very own interpretation of budgeting and here I am having my own! Because of my past struggles with finances, I've become very inept at getting rid of debt. Every time I've found myself in a financial pickle, I've realized that it was in part of me losing sight of my budget and me just winging it! I find that things spiral out of control when I don't monitor my budget closely. While I follow the general rules of budgeting, I've created my very own system of budgeting that seems to work for me and honestly keeps me sane. Most that know me, know that I am very old school; I love me some pen to paper! It's something about writing things down that makes it all seem so permanent. For creating my household budget I use the following: My Happy Planner Dated Yearly Planner My Happy Planner Budget Extension Pack A Lil Washi Tape A Few Stickers Pens, pencils and highlighters Double Sided pocket folders My Happy Planner: I've found that this planner keeps me most sane because honestly, the decorating option that this planner offers, is my life save! However, you can go with whatever is best suitable to you!