As a new business owner, you might find yourself struggling to keep the business finances in order. No matter how tedious or overwhelming it may seem, it is extremely important that you get a handle on what’s going on in your finances and with your budget if you are going to be successful.
You can’t make informed decisions about products, labor, marketing, or expansion if you aren’t keeping up with expenses and revenue. You also need to know about payroll and tax reporting. Here are few tips for keeping your business finances on track and under control.
1. Create Separate Accounts
Even if it is all your money going into the business, you still need to have two separate accounts for your personal finances and the business finances. If you combine the two, you will create chaos and confusion. It is important to track your personal spending and your business spending separately, as you will inevitably need to see what areas of business expense are having the biggest impact and bringing the best return on investment.
Separate accounts will also make it harder to accidentally drain the business funds for personal expenses that come up. Most importantly, it saves on a lot of headaches during tax season.
2. Invest in Account Software
Many new business owners aren’t always equipped to handle the financial demands and meticulous details that accompany business operations. Whether you rely on the accounting software for invoicing or as a paystub generator, you can avoid a lot of expensive mistakes when you let technology give you a hand with your accounting.
Depending on your line of work, you may need to find an option that’s suited for your industry, like construction accounting software.
There are a number of software options that are good for small businesses like payroll software for small business that comes with cloud-based storage and operations, letting you access your information from anywhere. Software programs are also generally very good about reporting and keeping you informed of daily, weekly, and monthly transactions.
3. Outsource Your Finances
Even if you choose to use software, you could also benefit from hiring a third party to do your books. You may find an accountant or bookkeeper as a key ally in financial decision-making, as they are better able to wrap their head around numbers more quickly and can see the bigger picture of the finances more easily.
You should also consider hiring a CPA or tax accountant when it comes times to file with the IRS. Business taxes can be complicated. This may need to be an expense that you only deal with in the spring, but consider keeping a CPA on retainer for more advanced financial assistance.
4. Follow a Budget
Your company can get into financial trouble if you don’t create a budget and stick to it. This is extremely important if there is more than one employee or administrator.
Everyone needs to know what funds are available to spend and what need to be left alone. You can’t hire more staff if there isn’t enough money coming in to cover the paycheck. You can’t have the office manager ordering lunch for everyone on Fridays and spending funds that should have gone to the marketing efforts. Make sure you devise and then enforce following a budget.
5. Plan for the Future
Don’t let your business finances be a spur of the moment decision. You never know when an emergency or crisis will occur that requires dipping into a savings account or puts more strain on your budget than you can realistically handle.
Every business should have an emergency fund, and you need to decide what percentage of revenue coming in should automatically be transferred into a separate rainy-day account. You should consider the future financial needs of the company, whether it is long-term growth or expansion plans or it is having three months’ worth of operating costs on hand for unexpected situations.
Don’t let your business finances get tangled up and become a problem. Even if you aren’t comfortable handling the accounting aspect of your company, there are plenty of resources where you can turn for help. Hire a bookkeeper or invest in special software. Your financial health isn’t an area that you should let go uncontrolled.