Jul 1, 2020
Regardless of what your role is in business, an economic recession is scary. You never know when one is coming, but by properly preparing ahead of time you can ensure your business's survival regardless of what the economy does. In this episode of Solopreneur Money, I interview successful CPA Solopreneur, James Buss, about how you can prepare for the unexpected and recover after the fact if needed.
If you want to set your business up to survive the toughest of times, choose the right program or loan to keep you afloat, and hear some tips on how to take care of yourself first, this episode is a must-hear!
Whatever business you're in, it can seem impossible to decide where to start. James' tips for a successful beginning are:
When it comes to starting your own business, having knowledgeable people to back you up like a banker who knows startups, an attorney to keep things legal, and a team of people that support your dream is valuable for your success. Even as a Solopreneur, you can't do everything completely alone, so take advantage of the people on your side and work together to achieve your success!
Unfortunately, knowing how to run a business, do taxes, and all the laws involved isn't natural to most of us. It takes work to get ahead and the technology available to help you achieve success is improving every year. Use these resources to make your business efficient and reduce the risk of user error. It's also essential to monitor your expenses and income by having your books done regularly. Regular monitoring will help you stay on top of everything and make sure you are prepared for any economic climate.
The PPP assists businesses that are struggling to stay staffed during a pandemic or other urgent shutdown. While suffering through a recession has its challenges, one of the hardest things is re-staffing your company afterward. This program is the most popular loan package as it has the most significant forgiveness plan.
If you choose to go this route or have already received this assistance, keep the money you receive into a specific account just for your PPP funds. Don't keep this money combined with your payroll because some pieces aren't forgivable and it will quickly become difficult to track the funds if they aren't allotted separately. When it comes time to do your payroll, you can transfer necessary funds in your payroll account, but for peace of mind, don't keep the funds together during regular business. It's also essential to have accurate documentation of your money movement to track all of your allotted funds to turn them into the bank for forgiveness.
Some other things to keep in mind are:
If you get caught misusing your PPP, there is a high risk that the loan won't be forgiven, and civil and criminal penalties could be tacked on. When used correctly, most Solopreneurs will receive forgiveness for the notes they've taken out as long as they use them appropriately.
In addition to the PPP, another assistance option during challenging economic climates is the EIDL. This option allows you to borrow more money, but depending on the amount you take out, you may have to provide collateral. This option could also make it harder to take out a loan in the future, even if what you need is business-critical.
The EIDL is a long term note, it WILL go on your books, and it's NOT forgivable. So before you do anything, talk to your banker! If you do choose to take out this loan, remember that you don't have to take the total amount offered; you can go from $0-max, so carefully consider what your business needs to transition through an economic recession and do the work to keep it as low as possible.
James's most valuable money tips are:
Before the first of the year, make a budget incorporating what you need for retirement. Make sure your business is prepared for economic recessions by implementing software that lets you work from anywhere. To James, mastering his finances means giving your money a job and having it work FOR you, rather than trying to figure out where it went!
Three crucial takeaways from this interview:
If you choose to use the PPP, set up a separate account and move money back and forth when you're ready to pay your team, also, work with professionals to keep all of your essential details in order.
If you need to utilize this loan, be very careful about how you use it. Talk to your banker FIRST, make sure you use it appropriately and do your research before you accept the amount you need to keep your business running.
Make sure you are adequately paying yourself and preparing for your future! Start funding your retirement and save as much as you can.
Visit my site for FREE resources to help you reach your financial goals. You can also email me for more information or schedule a consultation by visiting my website. All links are shared below.
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