Top 5 Tips for Managing Your Small Business Finances
When starting a small business, there are many things that entrepreneurs and partners need to keep track of and manage. Whether it is human resources, marketing, or finances, every task can be daunting if there isn’t a plan in place. Here are the five top tips to help you keep track and manage your finances from day one.
Have a Sound Business Plan
This sounds like common sense, but it is amazing how many individuals embark into the business world without a solid business plan. There are plenty of free templates that you can access from entities like the Small Business Organization. Why is this important? If you are looking for a loan, then one can look for business acquisition loan to buy a business, you will need to show that you have thoroughly thought through everything about current cash flow and future planning.
Keep Dedicated Accounts
Many small businesses start out with one person or two working out of their home or garage. As you form a real business and entity, it is vital that you keep your business and personal finances separate. Something that you may want to consider is if you are going to be an owner or an employee of the company. This will affect your taxes at the end of the year. Having credit cards and bank accounts that are specifically under your company’s name will help you to track your expenses better.
Keep Accurate Records
This is extremely important from day one. There are several online programs available to help you track your expenses, customers, bills, receipts and to reconcile your credit cards and bank accounts. Be warned, the moment you start falling behind on tracking your expenses, the harder it is to keep up. Keep all receipts for your records, including gas and business expenditures. Also, make sure you keep copies of invoices that you receive and payout. There is nothing worse than getting audited.
Pay Bills on Time
Credit is important. As a small business, credit is just as important as it is in your personal life. If you are looking to open a credit account at a supplier, you have to show that you are able to pay your bills on time. Racking up a good reputation for being a valued customer is not a bad thing. Loan entities will also be checking into your credit score, so do everything you can in order to keep on top of your bills and to keep yourself out of debt as much as possible. Even if you borrow money, stick to the payment arrangements.
Hire an Accountant
There are some things that many small businesses don’t feel comfortable with. This is especially true with paying state taxes and final taxes for the year. If you are uncertain, have an accountant or CPA on call, so that you can ask them specific questions. If managing your finances is too much for you to handle, call in the experts. This is one of the fundamentals of business. Although it will be an expense, having perfect records at the end of the year that is organized will help you in the long run.
Managing small business finances can be cumbersome, but you really must have an idea of where your money is going. If you see that you are not bringing in a profit, you have the numbers in front of you for materials and labour to ensure that you are charging enough. Keeping the most accurate records possible will help you to solidify funding.