If you want to grow your business, you will want to make sure you pay attention to the financial side of things as well. With small businesses, staying on top of your finances matters just as much as the ideas driving your business.
#1: Create a Detailed Budget
First, if you want to run a smooth business, you can't just make financial decisions on a whim. You need to create a detailed budget to ensure that you always have the cash flow to keep your business afloat. You need to sit down and figure out what your operating expenses are, what your payroll expenses are, and what your sales are. You need to work with an accountant to develop a budget that you can stick to that will keep your business in operations.
#2: Keep Personal Expenses Separate
Second, it is extremely important to keep personal expenses separate from your business expenses. Don't use your business debit or credit card to pay for personal expenses and vice versa. Don't use your account to cover business expenses; budget so you always have enough money in your business accounts to cover your business needs. Your taxes will be much simpler if you don't mix your personal and business money.
#3: Track Invoices
If you run a business where you bill customers via invoice and pay you after receiving goods or services from you, you need a system in place for your invoices. Offer a discount for paid invoices within a set period, such as two weeks. Follow up with customers as their invoices age to ensure they are paid on time. If an account becomes severely overdue, have a process for collecting from your clients. Your account receivables help keep your business afloat, so stay on top of them.
#4: Use Accounting Software
Long gone are the days where you need to do your accounting by hand. There is lots of accounting software out on the market that you can use. There is both general accounting software and industry-specific accounting software that will help you stay on top of your business's finances.
#5: Hire an Accountant
Keeping your accounting in good standing is vital to your business's success, which is why you should outsource with an accountant. They can help you with your accounting software and make sure you are doing things that will keep your business in good financial standing, such as running accounts receivable aging reports, doing regular bank reconciliations, and sticking to your budget.
When it comes to running a small business, don't ever de-prioritize your finances. Your finances matter if you want your small business to succeed.
Share13 January 2021
Accounting is the absolute most important element of running a business. If you mess up the bookkeeping even the slightest bit, the entire business could be in trouble. I know how costly a small bookkeeping error can be. About three years ago, I made a seemingly small mistake in the financial records for my business and the next year when I filed my taxes, things were very bad for me. What would have required a small tax payment had suddenly turned into a big tax bill and quite a headache. Since then, I have worked with an accountant and things have been better.