Small Biz Millionaire Ep. 8: Economic Responsibility
HTML-код
- Опубликовано: 11 июн 2024
- As a business owner, you have to understand the language of money. One thing an owner has to have though is economic responsibility.
You have to really understand money and you have to understand where it goes.
1. Business Account: First thing you want to do is you want to put your money into a business account, all your revenue goes into one account. Revenue comes from your services,
what you sell, your labor, whatever that is, but all revenue goes into one account.
2. Payroll. Your employees have to be paid for the work they've done.
If you don't have employees, you can't get anything accomplished. So you have to take care of them first, then you have to take care of yourself. You should always make sure they're taken care of and I'm going to point out right here, the owner, you deserve to get paid.
3. Tax Account. Make sure you have a separate account that you want to put your taxes in.
Make sure you have a separate account because you got to pay not only the IRS, you’ve got to pay state and local taxes as well.
4. Business expenses. Moneys that have to be paid out each month
and moneys that you rightfully owe. So you have to make sure you pay that. That's called Accounts Payable by the way.
5. Business savings. It's kind of like a business emergency fund, you want a separate account over to the side and you want to just put in, if you can afford it it, $1,000 or $5,000,
but it's that cushion - so if you run into a slow time because most businesses are seasonal,
most businesses have a high season and a low season and sometimes you need that money to
help you get through to pay your employees or your vendors, or your rental, your building, or mortgage payment, you know whatever.
3 to 1 ratio: It’s usually a 3:1 minimum ratio in order for you to make a profit, for you to build a profitable business, you to pay off all your property, and business bills.
Also for you to make yourself a good payroll and for you to buy assets on your side.
Personal: You have a right to earn a living.
I recommend that you pay a W-2. Pay all your taxes. Do everything you're supposed to do.
That way you can max out your 401K plan or your Simple Plan or you SEP IRA plan depending on how you've got your business retirement plan set up.
Because you're allowed to pay up to 25% after you get to a certain level,
minimum of 17% - very important for you to retire wealthy.
Emotional maturity, act like a grown-up.
Don't think because when you take that money and you put in your account,
you can go out and just spend it on fancy cars and bigger houses and vacations.
You deserve all those things, I'm not saying you don't,
but when you’re first starting out, for the first five to ten years,
you really need to work in the business hard and learn how to work the business,
in order to get all those things that you want. And I call it, “act like a grown-up”.
You’ve got your kids to pay for, you've got your home to pay for, you've got to live okay.
You have to do all these things.
Retirement accounts are very important, it goes back to the W-2 wages I mentioned.
You want your 401K’s, you want the Roth IRAs
Roth IRA - So you put in your $6,500 and it grows tax-deferred for the rest of your life.
So if you're a young person, say you’re 20-25, you put in your $6,500 four, five, six years in a row, you'll have a million dollars by the time you're 65.
Emergency fund: You want 3 to 6 months of your income, whatever that is, and you want that into a separate account.
Personal savings: I always had a personal savings account, and sometimes I can only put $100 a month, $50 a month, maybe $500 a month. As I got further in business, and I left that money out there and I never touched it.
I actually called it my Amnesia Account.
“A budget shows your spending habits.” You need to have a budget to keep yourself in line.
That is very important because you always want to live below your means, because if you don't,
you’ll get yourself in trouble. The banks make most of their money off of
non-sufficient funds.
Folks I hope today, this was good for you, I hope you got something out of it.
This is just a brief summary of what you need to do.
Once you start making the money, put it in all these assorted piles, and you will have to learn this.
This is another Language of Money sermon, is what this really is.
If you like this video, please share, please subscribe and please comment.
Thank you.
David
Absolute gold. Going to show this to my niece and nephews. They'll listen to a third party more intently.
Never to early to teach a proper financial system of how to succeed in life. Great job.
The world needs to know the sacrifice business owners make, especially in the beginning.
Again pure gold.
Ron you know I learned from the best😊
Thank you for all your help and support
You are a smart man, thank you, for sharing your knowledge that actually took you for all the years being in business. Thanks David.
Don’t Make the mistakes I made in the end I want you to pay it forward
Oh man I’ve been waiting for your videos!!!
Let me know if there’s anything you want me to Talk about I’m here to help..