5 tips to keep your small business finances in order
Every business, regardless of how small, runs the risk of failing if the business owner fails to incorporate proper business finance management into their business accounting. Leading a life of an individual is quite different from being an entrepreneur, and once you establish your business, you need to start paying attention to every single dollar that concerns your business. It is very vital that you spend based on planning and budget. And even when you start realizing large revenues, this should still be a code you operate by. In fact, even if – as an entrepreneur- you some personal debt obligations to tackle, you should seek out government debt help scheme to handle your personal debt; instead of mismanaging your business funds. With that being said, it is true that proper business finance management is no child’s play and as such, you cannot afford to handle it with levity, which is why we’ve devised these five actionable tips to get you started on it.
Keep it separate
That latest kid backpack isn’t a business expense, but because your business credit card was available, you paid for the backpack with it. Well, there is nothing wrong in paying back your business for a personal expenditure or vice versa. But, if you really want to do that, then, you should record an accounting transaction. Things sometimes get complicated quickly and when it concerns your business, you don’t want to have that headache. By keeping separate credit card and bank accounts for personal and business purposes, you will save yourself hours of balancing books. This will also make it easy for you to keep track of deductible expenses in one place. It is true that some software and mobile applications could do the behind-the-scenes balance for you, but even at that, it is recommended that handle your personal and business finances independently.
Hire a pro
Since the time of Abacus, accountants have been trusted advisers and respected allies of small business owners across the globe. Their unrivalled understanding of the profession as well as relevant tax laws in their jurisdiction will save you money every time they come in. I understand how tempting it can be to save a few bucks by handling your business finances yourself, but trust me; it isn’t always cost-effective in the end. A pro will almost always find deductions which will keep you penalty-free. And on this note, you will have a clean financial record.
Write it down
Yes, like for real, take a pen and write it down! Set aside about 15 minutes of your time every week – not even up to the time you will spend chatting on social networks – to organize your business finances, and make sure nothing else is distracting you during this time. This will help you identify and understand your relevant expenses as well as those expenditures that are becoming redundant. Trust me, every time you sit down to organize your small-business finances, you will always find at least an expense to cross off your expenditure list.
This is the only tip on the list which doesn’t concern your business directly, albeit it involves every business owner. Do you have an existing personal debt, are you finding it hard to fulfill your monthly payments, and you are starting to use your business revenue to fund the debt? Well, it is time to get creative! If you want to keep your small-business finances in order, then you need to stop channeling its revenue towards your debt payment. There are multiple ways to get creative with your debt, one of which you will find here, and guess what; it is even the best debt management scheme for a business owner.
Don’t forget to get paid
Weird as it may sound, but many sole proprietors fails to properly track invoices and customer payments. If you don’t keep proper records that you can make sense of at a glance, it could take months before you discover you have some outstanding invoices you haven’t tracked. Hence, you need to keep proper records of all your invoices, and customer transactions so that you wouldn’t be collecting late payment or missing out on payments altogether.