Personal Finance
March 14, 2019

Best Banking Advice for Small Business Owners, Side Hustlers, and Gig Workers

Written By Mary Beth Eastman
Last updated March 14, 2019

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Small business owners, side hustlers, and gig workers often have to put more effort into managing money than salaried workers do. The following banking advice should help make sure you reach your financial goals and make the most of your banking options.

When filing your taxes, you can deduct business expenses from your income. Every dollar counts, so you should keep track of every expense. Even if you only spent $6 buying coffee at a client meeting, you need to deduct that from your revenue.

Getting a business credit card makes it easy for you to keep your business and personal expenses separate. At the end of the year, you can look at your business credit card invoices to make filing taxes easier. See the best credit cards for your credit score to find out which card is a good fit.

As a small business owner or freelancer, you have to make quarterly federal and state tax payments. If you miss payments, then you will pay a fine at the end of the year.

Since you don’t have an employer, you will pay more taxes than the average person. Prepare for tax payments by putting at least 25% of your income into a high-interest savings account. For the best interest rates, turn to online accounts from companies like Ally and Marcus by Goldman Sachs.

Your income will likely experience ups and downs throughout the year. During some months, you may exceed your income projections. At other times, you may fall short.

Don’t let changes in your business revenue affect how much money you earn. Instead of living off of your revenue, funnel all of the money into a business account. Use that account to pay yourself a predetermined salary every week or month.

Many people find that they can budget better when they pay themselves salaries. Ideally, you will have money left over at the end of the year to invest in your business or pay yourself a bonus.

You need to invest in a retirement account just like everyone else. Unfortunately, no one will match your contributions. You need to take control of your savings and choose smart investment vehicles that will prepare you for retirement.

Some of your best retirement investment options include:

  • Traditional IRA
  • Roth IRA
  • SEP IRA
  • SIMPLE IRA
  • Solo 401(k)

Aim to invest at least 10% of your income for retirement. If possible, dedicate 15% or higher. The more you invest, the more money you will have during your retirement years. Choose one of the best online IRAs and you can get started easily.

Although you need to manage your finances differently than people with regular jobs, you have similar goals. As long as you save money, invest in retirement, and track your business expenses, you can help your career thrive.

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