Considerations For Managing Your Business Finances

July 22, 2025

Working for yourself gives you freedom, flexibility, and control. However, it also means you are fully responsible for your finances. No matter if you are freelancing, consulting, or starting a small business, knowing how money moves in and out is important. A solid handle on your revenue and expenses not only helps you keep the lights on—it can also position you for growth, funding opportunities, and long-term stability.

Here are five practical strategies to help you take charge of your business finances from day one.

1. Predict Your Revenue and Set the Right Prices

The first step in managing your business finances is to forecast how much money you expect to bring in. This projection—called revenue—is the total income from selling your products or services, before subtracting your expenses. It's different from profit, which is what’s left over after your costs are paid.

To estimate your revenue, you’ll need to determine what you’re charging. Pricing your offerings is part science, part art, and depends on your industry, competition, costs, and customer expectations. Here are three common pricing models:

●     Cost-plus pricing: This assesses the cost of completing a project. For example, if creating a product or delivering a service costs you $100, and you want a 40% profit, you’d charge $140. This ensures your expenses are covered and that you turn a profit.

●     Market-rate pricing: This involves researching what others in your field are charging for similar work. It helps you stay competitive and understand what clients are willing to pay.

●     Value-based pricing: This model is based on the perceived value to the customer. If your work helps a client earn $10,000, charging $2,000 might be a fair rate, even if your costs were much lower.

Freelancers can also choose between hourly rates, per-project pricing, or even retainers. Consider offering premium pricing for rush work or volume discounts for long-term clients. Over time, reassess and raise your rates to reflect your growing expertise and rising costs of living.

Once your pricing is in place, project how many products you’ll sell or clients you’ll serve.

Multiply that by your price to estimate revenue. Consider running best-, worst-, and average-case scenarios to stay grounded in reality. If you're just getting started, launching your business as a side hustle can give you insight into what to expect.

2. Understand Your Business Expenses

No matter how much you earn, your expenses will eat into your profit if you’re not careful. Categorize your expenses into two types:

●     Fixed expenses: These don’t fluctuate based on your sales or usage—think rent, software subscriptions, or loan payments.

●     Variable expenses: These vary with your activity level, such as shipping costs, raw materials, or mileage.

Your largest recurring expense will likely be your own salary. This should cover your personal living expenses and reflect a realistic wage for your work. If you have employees, their wages and benefits must also be accounted for.

Other common business costs may include:

●     Office space (home or leased), utilities, supplies, and internet

●     Marketing, advertising, and website hosting

●     Legal and accounting services

●     Insurance for health, liability, or property

●     Retirement contributions and healthcare (especially important if you’re no longer covered through an employer)

Don’t forget to budget for unexpected costs or seasonal dips in income. Planning ahead can help you maintain a consistent income and avoid financial stress.

3. Estimate Monthly and One-Time Costs

Some costs are predictable—like business licenses or software subscriptions. Others, like hiring help or travel expenses, may be more variable. Do your research, ask industry peers, and get quotes from vendors to build realistic estimates.

Organize your anticipated expenses into monthly and one-time buckets. This breakdown gives you a clearer picture of your minimum monthly revenue target. It also helps you identify the months when cash flow might be tighter and plan accordingly.

4. Open Dedicated Business Bank Accounts

Separating your business finances from your personal finances is one of the most important moves you can make. Start by opening a business checking account and, if needed, a business savings account or business credit card.

Here’s why this matters:

●     Legal protection: If your business is set up as a separate legal entity (like an LLC), mixing personal and business funds could weaken your liability protection.

●     Professionalism: Customers and vendors are more likely to take your business seriously when payments go through a business account.

●     Tax benefits: Keeping business expenses separate makes it easier to track deductions and streamline tax preparation.

Some brokerage firms also offer cash management accounts that combine checking, savings, and investing functions—all under one roof.

5. Maintain Clear Boundaries Between Business and Personal Finances

When you're self-employed, the line between your business and personal life can blur. But keeping the finances separate helps you in several ways:

●     Better budgeting: You’ll be able to track income and expenses more accurately and plan your spending.

●     Simplified taxes: Filing is easier—and you're less likely to overlook deductions or trigger audits.

●     Stronger business image: Clean, organized finances can signal reliability to potential clients, lenders, or investors.

Be sure to include your salary in both your business and personal budgets—it’s a business expense on one side, and personal income on the other. Over time, this clarity will help you make smarter decisions about hiring, scaling, or taking on debt.

Final Thoughts

Financial planning for self-employed professionals is not just about paying bills. It is also about creating a successful and sustainable business. Whether you’re freelancing solo or preparing to hire a team, clear pricing, thoughtful budgeting, and disciplined financial habits can help you thrive.

And remember, while you’re the boss, you don’t have to go it alone. A financial advisor or accountant can help you make confident, informed decisions as your business grows.

Sources:

https://www.fidelity.com/learning-center/life-events/how-to-manage-business-finances

Disclosure:

This information is an overview and should not be considered as specific guidance or recommendations for any individual or business.

This material is provided as a courtesy and for educational purposes only.

These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.