(As a small business owner, managing your money can be a bigger concern for you. Don’t worry. Here are some helpful tips for you to manage your small business finances easily and efficiently.)
“Financial management is at the heart of any business. It is one area that can help drive it forward” — Anonymous
While there can be various challenges a small business face during its growth, concerns related to finances top the list for most SMB’s owners. Most of these problems occur due to the mismanaged finances and poor way to handle cash flows.
Some companies don’t have realistic plan, some set their financial goals too high or low, some don’t keep the track of money and some fail to pay the bill on time. All these things lead your small business to failure.
And what will you do if you have little to no experience with accounting?
Remember, you need to stay on the top of your small business finances to make sound financial decision. Don’t worry!
Here I have come up with some practical tips which help you manage your money more effectively.
Keep Your Business Separate from Personal Accounts:
Do you use your business credit card to purchase household items?
Even though you can transfer the funds back to your business accounts for such personal transactions any time, it requires you to record an accounting transaction every time you do that.
It will make your accounting complicated as you have to sort out the personal expenses in the end, especially at a tax time. Needless to say it is time consuming and full of hassles as well. So, keep your business and personal expenses separate. It will be easier for you to keep track of all expenses in one place.
Know the Basics of Business Accounting:
Even a basic knowledge of accounting helps you manage your small business finances efficiently. Work with your accountant to get familiar with the buzzwords like gross revenue, net profit, and cash flow. Or you can opt for an introductory accounting course online or at local college.
Hire an Accountant:
It can be tempting to do the accounting yourself just to save some bucks. But accounting is a complicated field and more than just calculation. So, it makes a sense to leave your accounting work to someone who is professional.
A professional accountant will not only manage and record your expenses, but also help you save money and avoid tax penalties. Make sure your accountant is certified and licensed to practice in your state.
Use Accounting Software:
Accounting software is a quick and efficient way to manage your small business finances. You can use a simple spreadsheet program like Open Office Calc or go for a dedicated business accounting program. However, I recommend you a specialized accounting program over simple spreadsheet for a better and efficient tracking of the finances.
For example, it is quite time consuming and stressful to prepare pay stub with spreadsheet programs. Pay Stub generator, on the other hand, is an efficient and faster tool to generate professionally created pay stub in a few seconds.
Pay Your Bills on Time:
It is extremely important to pay off your business expenses on time. Besides credit card and loan payment late fees, penalties associated with vendor and utility bills add to your unnecessary expenses. Similarly, you can end up with some serious penalties on the late submission of the taxes.
So, consider paying your bills on time. You can set up monthly reminders to make sure there are no bills pending from your side.
Understand Your Cash Flow:
Keeping the track of cash flow is one of the important tasks for the businesses. It will help you monitor expenses for crucial business operations like marketing, inventory, purchases and facility expansion. In simple words, it helps you understand where your money comes from and how it goes.
With the help of these tips, you can stay on the top of the financial management and make informed money management decisions.