Where should my lawn care business money be going?

Money management is a skill so many of us lack. It is especially difficult to manage your money in the first few years of starting your business because of the wide range of unknown variables. But if you are trying to come up with a money management process to keep your household and business running smoothly, consider these tips from the Gopher Lawn Care Business Forum.

One new lawn care business owner wrote “I have read on the forum and learned in the lawn care business school about getting a DBA which gives you a certificate to open a commercial bank account. But is that where my money should be going? A friend of mine said it’s not a good idea to have a commercial bank account, because if things go sour that money is the business’s money and I can’t take it out.

Is there a better way to do things? How should I handle the money I am making from mowing lawns? Are there any tips I am missing?”

A second lawn care business owner said “First off, you need commercial liability insurance. That is what will save you if you have any type of accidents while working. With insurance, you don’t have to be concerned about hiding your money.

Secondly when it comes to where should you put your money, here is how I do it. I have 3 bank accounts. 1 is a checking account and the other 2 are savings accounts. The first savings account is for emergencies, for the truck, and equipment . This money covers any repairs, tires or whatever else is needed. I keep a minimum of $3,000.00 in it.

The second savings account is for taxes. Don’t forget to pay uncle sam. I put $50 bucks a week in it to pay my quarterly estimated taxes. How much you should put in depends on how much you are making and what your expenses are.

My checking account is for when I’m not doing anything in the winter. It serves as my pay role. I take out a pay check every 2 weeks from that money. Depending on your mowing season, you have to make sure you have enough in there for the slow months to cover your company expenses.

When I first got my lawn care business started I this advice from a money counselor. He gave me some ideas that I applied to my personal expenses as well as my lawn care business expenses.

Each month I have 3 envelopes. The first is for my house payment/rent. The  second is for food. The third is for utilities. I put money in them every time I get paid and at the end of the month I pay all of my living expenses first. Then what is left over is for other bills and entertainment. Doing things like this has helped me stay on a strict budget.

The same deal applies to my business as well. Everybody has to pay taxes and you will also have repairs. I have talked to some other guys the lawn care business and they seem to just struggle with their money management. This is especially true when it comes to tax time because they don’t plan or budget for such expenses. Last year, one of my fellow entrepreneurs used his credit card to pay his taxes while I got money back!

As business owners, we also need to prepare for the unexpected. When my area was being hit hard with a drought and I was not mowing as much as I’d like to have, I was really hurting for money. At almost the worst time, my truck broke down and I needed a new transmission which was going to cost me $2,800.00. At that point, I only had $1,000 in my checking account and it was the middle of the month, so I pulled the money out of my savings account to pay for it. Thanks to my strict budget, I was lucky to have the money in there as was able to get my transmission fixed to mow another day.

I am always learning from my experiences and now I know I need at least 3 to 6 months of living expenses saved in my savings account, just in case. For people who have businesses like us, I am thinking it would be even better to have a year of it saved, just in case.

Since implementing my budget, I really don’t have to worry through out the year because I have enough to pay my bills and put money aside for the winter months. While others are struggling with their money management I am able to sit back and relax through out the holidays and I like that.

So know the expenses you have to run your company and household. Build up from there and always remember, uncle sam wants a paper trail.”

Order the book 90% Of Lawn Care Businesses Fail In Their First Year. Learn How To Survive With These Tips! today.

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