"Over the last year, I’ve been saving money for future business needs and have managed to collect a large sum. What are the best ways to use this money?"
Having money in savings is a great business practice that will serve you well in the future. Here are five excellent ways to use your savings:
Neglecting to budget for your quarterly tax payments can have you scrambling for funds when tax season approaches. It’s best to account for your taxes all year long by setting aside a designated amount of your profits for tax payments. An Alaska USA business savings account can be a great place to keep these funds. Your money is secure, easily accessible 24/7 through online banking.
Consult your accountant to identify how much money you should be putting away for future tax payments, or to make an estimation based on last year’s taxes.
No one expects emergencies to happen, but they always do. It can be a steady client who suddenly goes bankrupt, a fire at your main production plant, or a fantastic employee who abruptly up and leaves. It’s good to have an emergency stash of cash to help you through hard times until your organization has fully recovered.
It’s best to have 3-6 months’ worth of capital set aside to cover emergencies, but any amount of savings you can put away will be helpful to have on hand should the need arise.
You’re careful to budget for everyday expenses, but have you considered how your business will cover the occasional expense that takes a huge bite out of your budget? Think holiday bonuses, semi-annual insurance premiums, equipment maintenance, and more.
Take the stress out of these budget-busters by anticipating and planning for them well in advance. Review the occasional large expenses of the past year, divide that amount by 12 and then set aside that number into savings each month of the year. This way, when it’s time to write out those huge checks, you’ll have the cash on hand to stand behind them.
As your business thrives and your client base grows, you may need to expand your physical location, product lines, or the range of services you offer. Having a savings safety net for tapping into as necessary can help you accommodate the growth of your business without paying interest rates or feeling the pinch of a loan for months or years to come.
Even the most super-successful businesses can run into an occasional cash-flow issue. It might be a time-lag from production until sales revenue kicks in, or maybe it’s just a slow season for your products or services. Either way, running dry on liquid funds is always stressful. You’ll still need to pay your suppliers, meet payroll, and continue production, no matter how empty your checking account might be. A robust savings account will help your business operate as usual even when incoming cash is sparse.
Alaska USA is one of the nation's largest credit unions with decades of experience in business development ready to work for you.
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