Keeping your business finances in order from the very start will save you a lot of headaches, time, energy and money. And it’s never too late to begin, even if you’ve never reconciled a single account!
Invest in accounting software and/or a CPA
Many small business owners overlook the importance of business finances. It is behind the scenes and there’s so many more exciting things to do with your small business such as develop a great website, engage with customers on social media and refine your customer service. These are all great and necessary tasks.
Keeping your small business finances in order may not be as exciting, but it is more important and must be done accurately and often. This is one place that you may need to delegate and trust an employee to assist you. Be sure you are using accounting software, a CPA or both. It is worth the investment.
Separate personal and business finances.
Every business should have its own trading account, business debit card and business credit card. This will help you know your income and expenses quickly, have your deductible expenses properly recorded and will make accounting much easier.
Remember to actually get paid from the business and see it going into your personal account. Don’t put that spa payment on your business credit card if it isn’t tax deductible. It just creates a lot of balancing, juggling, paperwork and annoyances at tax time.
Be organized, don’t procrastinate .
Taking a few minutes once a week using software, an app or a cloud accounting resource is a huge benefit. This will help you have your expenses easily accessible and records more organized for tax preparation. This will also help you notice any changes and take care of things promptly which can save you money.
Many small business owners do not take the time to do this and end up with clutter, missed financial opportunities or inadequate savings. Small business owners who procrastinate with this task often end up feeling overwhelmed with a pile of paperwork that will take even longer to sort out later.
Have one place where you keep everything related to your business finances. If not, you’ll never know where to look for that receipt and you’ll waste a lot of time searching!
Stay on top of invoicing.
Always send invoices on time and consistently. Too many small businesses forget to send out that one invoice or they forget to send out a past due invoice. Stay on top of what isn’t paid and stay on top of collections. There are many online resources to help you with invoicing.
Create operational budgets.
Your household needs a budget and so does your small business. A small business budget is a little different than your household budget. It is more of a guide so you can decrease labor or add marketing or other expenses as needed.
You need to know how much you have to spend, how much is coming in and where you can allocate funds. There are seasons that are busy and seasons that are slow. Using a budget for key areas of your business can help you make necessary adjustments.
It is difficult to decide which accounting software to use, which CPA to hire, which bookkeeping app is best or which cloud service is the greatest, as each depends on your unique situation, business and needs.
Here’s a few of our small business favorites for you to consider:
Wave makes running a small business better (for over 2 million small businesses, freelancers, consultants and contractors) by providing free accounting, invoicing, receipt scanning and personal finance, plus affordable credit card processing (payments) and payroll.
FreeAgent is one of the UK’s largest online accounting services, helping thousands of freelancers and small businesses manage their company accounts.
Brightbook is a free online bookkeeping system for freelancers, contractors and small businesses. Users can create and send professional looking invoices in any currency, track bills and more.
Yendo, a cloud computing app, provides accounting software for small and medium sized businesses. Users can manage invoicing, purchases, expenses and payments as well as profit & loss, balance sheet and create their own reports to chart their companies performance.
GetHarvest offers simple online time tracking, fast online invoicing, and reporting software. They aim to help users simplify employee timesheets and billing.
These tips and resources could help you have even greater financial success as you learn to keep your small business finances in order.
This article has been edited and condensed.
Jayne Blake works as a Communications Manager at Prospa, Australia’s largest online business lender. She is interested in new marketing strategies and leadership trends. Connect with @howtoprospa on Twitter.