When I was in my late teens, I decided to venture into uncharted territory and open my own limited liability company (LLC) for a business idea I had.
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I ran my business for nearly three years. I decided to close my business when I was in college due to my busy course loads, but I don’t regret my time running it.
I’m a horse lover and have tons of experience with them, so my business involved me going to birthday parties, local gatherings and other events with miniature horses and handling them for the enjoyment of the crowd. None of my immediate family or friends owned any businesses, so this was a steep learning curve for me.
1. Track all your earnings and spending
This experience taught me a lot about budgeting and saving at a fairly young age, and I’ve been able to apply those lessons to my personal finances to this day. Here are three things I took away about money handling as a first-time LLC owner.
Seeing the total monthly and yearly incomes I made from my business after expenses taught me very quickly the importance of keeping detailed financial records.
Initially, I only considered big expenses such as insurance, horse feed, and other larger purchases when tracking my business expenses versus my personal expenses. However, as time went on, I began to see the value in including all business expenses, no matter how small, because they add up over time.
Until I started factoring in all the small expenses of maintaining my horses for the business, I had a skewed picture of my income, which affected the way that I budgeted. Keeping detailed records helped me to budget more accurately later on. Keeping track also became very important when it came time to pay my taxes. When I first began, I was able to write off a lot of my business expenses because I wasn’t making enough money through it yet.
The man who helped me with my taxes encouraged me to keep track of all financial records — even the gas money I spent to get to different events I was hired for. Keeping these records also helped me in case I ever got audited and needed all my financial information readily available for inspection. 2. Set both monthly and yearly budgets
As a teenage business owner, budgeting wasn’t something I had much experience with when I started. However, once I got the hang of it, it completely changed the way I viewed my finances. In the first few months, I noticed a recurring problem where I’d overspend on my business and then use money from my personal bank account to pay for things. So, I set out to make my business fully self-sustained.
In numbers, I was able to keep my monthly expenses to $200. I charged $150 per one-hour event, and so I only needed 2 events per month to self-sustain my business without dipping into my personal account for expenses. 3. Always have an emergency fund
In the end, I stuck to a minimalist budget and saved what I made during good months for the big yearly expenses or put it toward my emergency fund. With that in mind, I crafted a budget to meet my new goal. The biggest challenge was that my monthly income from the business depended on how many events I did, and what types of events they were, which could vary greatly. I also needed to take into account my larger, yearly business expenses including vet checks, hay, and insurance for my horses.