4 Business Money Tips Women Need To Know

Most women in the United States earn less than men, experience higher poverty rates than their male counterparts, and face adverse health conditions. 

Despite these factors, according to theNational Association of Women Business Owners (NAWBO), 11.6 million companies in the United States are owned by women. These businesses employ about 9 million people, and they have generated $1.7 trillion in sales as of 2017. 

If you are a woman who recently started your business or plans to start a business soon, you should read these four business money tips every woman should know. This advice, combined with hard work and help from others, can help you become a successful businesswoman like Abigail Johnson or Safra Catz.

1. Find the Free Money

Do your research to find small business grants specifically for women offered by federal and state governments and national or local organizations. The competition for small business grants is fierce, but if you receive an award, it’s like getting free money. Below are a few grants available to female small business owners.

Eileen Fisher Women-Owned Business Grant Program

The Eileen Fisher Women-Owned Business Grant Program was started in 2004 and awards a total of $100,000 to up to 10 women business owners every year! Eileen Fisher once said, 

“I want to encourage women entrepreneurs, especially those who firmly believe that business can be used to create social and environmental change.”

You can apply for this program every spring and must include your business plan and financial data. Make sure you meet the following eligibility criteria: 

• At least 51% of your business ownership must be owned or led by women.
• Your business has been operating for a minimum of 3 years.
• The revenue generated by your business is less than $1 million per year. 
• Your business should have a focus on environmental or social change.  

Small Business Loans & Grants

The Small Business Administration (SBA) is a valuable resource for all business owners. SBA partners with local organizations to provide counsel, mentorship, and training to small businesses, and offers a few initiatives just for women such as InnovateHer. If you want to apply to Federal Government contracts, SBA can help you. Find the SBA office or partner in your area today!

The Girlboss Foundation Grant

If your business is related to design, fashion, music, or  arts, you can apply for the Girlboss Foundation Grant. This grant was first launched in 2014 by entrepreneur Sophia Amoruso. The Girlboss Foundation awards grants twice a year to female and female-identifying entrepreneurs. You can receive funding up to $15,000 based on your financial need, business plan, and creativity.

2. Keep Your Business and Personal Funds Separate

Before you get your business started, create a budget, and establish a business bank account specifically for your business. A business budget and bank account help keep your business and personal funds separate. Commingling your personal and business income makes it more challenging to track your business revenue. Separation is also crucial for the Internal Revenue Service (IRS) if the IRS audits you. 

Therefore, open a business checking account and savings account for your business transactions. Once you establish your company as a Limited Liability Corporation (LLC)  corporation or other entity, this is a must. Before then, you can open a separate personal bank account where you only conduct business transactions. Regardless of how you set up your business account, keep track of your expenses and sales. Tracking your expenses makes it easier to calculate your total profit and costs.

Do your best to find a bank that offers inexpensive or no fees for small businesses. No matter how much money you make, you should always avoid unnecessary charges.

3. Make a Business Budget

Business budget planning is just as important as having a personal budget. A budget ensures the long-term success of your business. It also helps you see, each month, if you are on track or spending more than you can afford. Plus if your business is not profitable yet, by tracking your expenses, you are also tracking what your business owes you. You can reimburse yourself once your company is profitable. Below are some things you should include in your small business budget.

Revenue and Profit

Step one of making a budget is to figure out is how much money you are bringing in every month. Add up your sales and other business income sources.  

Make sure that while calculating your income, you are calculating your revenue only, not your profit. Your revenue is the money that comes to your business before you deduct expenses. On the other hand, your profit is the amount of money you have after you deduct costs.  

If you don’t have any sales yet. Then include in your budget expenses you are going to incur to make your product, pay yourself, and cover other business needs. While operating your business, you will have to bear some necessary fixed costs. These fixed costs can occur monthly, weekly, and even daily. Some fixed expenses related to your business are:

1. Rent 
2. Supplies
3. Utility payments, including phone costs
4. Taxes
5. Insurances
6. Cost of maintaining a website
7. Payments on business loans

You will find some expenses related to your business vary based on your usage. The more you use, the higher your costs. Most of these variable expenses are necessary for your business to operate, such as:

1. Your salary
2. Office supplies
3. Marketing expenses

Profit and Loss Statement

As a business owner you should have a profit and loss statement or P&L for short. This statement reveals your revenue and costs of your business and shows your profit or loss in a month, quarter, or year. 

You should create your profit and loss statement at least every quarter. It will help you to make critical financial decisions and is excellent prep work for business tax returns. When preparing your taxes, remember your net income is calculated based on the information on the business tax return or your P&L statement.  

If you recently started your business, you may not have enough information a profit and loss statement yet. Therefore, you can create a report based on future income, which is called a pro forma statement. You may need your pro forma profit and loss statement when applying for funding or grants. 

The Math: Calculating  Your Profit and Losses

To get started, add up all your income and then add up all your expenses for that particular month. Then, subtract the expenses of that month from your income. You want to get a positive number. A positive number means you made a profit. If not, you are operating at a loss, but hopefully not for long.

4. Pay On Time

It’s essential to pay your taxes, debts, and paychecks on time. Timely payments help you establish business credit and good relationships with your vendors. 

Taxes

When you collect federal payroll taxes from your employees, you are responsible for paying that money to the government each quarter or when you file your taxes. You will pay late fees and interest if you don’t pay your taxes on time. Furthermore, if you don’t file taxes at all, you can face criminal action. The IRS has the power to take control of your business and seize funds from your assets or earned income. So don’t mess around with the IRS.

Related Reading: Got a Tax Problem? These 5 Tips Will Solve It!

Debts

If you have a sole proprietorship, you are liable to pay off all your business debts. Whereas, if your business is a corporation or LLC (Limited Liability Company), you have to pay off the debts which you have personally guaranteed. However, in both cases, pay off your debts on time to avoid putting your personal assets at stake. 

Payroll

When you are employing people, it becomes your duty to take care of them. Some state laws can penalize you for not paying your employees on time. Apart from that, you can lose your employees for not issuing timely paychecks. Don’t mess with other people’s money because you wouldn’t want anyone to mess with yours. So pay your people on time. 

Every business owner can expect to experience ups and downs in your business. Despite your circumstances, remain optimistic throughout your journey to become a successful businesswoman! Hopefully, these business money tips will help.

If you have any other ideas for the Purpose of Money Community, please share them in the comments below. We love to support one another in our business ventures.