Keeping personal finances in check can be an extremely challenging and tricky task. Now imagine the difficulties small business owners face when managing their company-related finances.
Receivables, credits, overhead expenses, direct expenses etc. etc.—the process can be overwhelming and daunting to say the least.
Even a small negligence or mistake can prove to be costly.
Debt can grow beyond control, missing on timely collections can leave the money-well dry, outstanding payments can lead to fines and penalties – and ultimately tax filing can become a nuisance as well.
Having said that, keeping small business finances in order is achievable and we are here to help you with that.
We’ve compiled a list of simple to manage small business finances.
Tip #1: Use calendar to remember important due dates
Yes, anniversaries and birthdays too, but remembering due dates is perhaps more important – at least from business point of view. These include bill due dates, due credit dates as well dates where you are due a payment from your customers. It’s vital you keep track of both.
Paying your creditors and bills on time will help avoid late surcharges and hefty penalties while timely payment collections help maintain a healthy cash flow.
Tip #2: Keep your personal and business expenses separate
It could be convenient to use your business credit card to make a purchase while you are out shopping with your family – and you may even pay back your business – but it’s better to avoid this practice. Likewise, you should avoid using your personal credit card to make business related transactions.
A onetime purchase can quickly add up, and it can be difficult to keep track of your business expenses. As a result, you can end up undermining or overcalculating your business expenses. You might also lose on deductions.
Tip #3: Make a habit of revisiting your labor expenses at least once a week
Labor expenses are one of the biggest expenses when running a small business. And one, which if not monitored and controlled, can quickly get out of hands.
Wages, benefits, overtimes, training costs – they can be pretty challenging to manage and often present opportunities where you can save plenty. Only if you are willing to keep a check on them.
Even a 15-minute review once a week is enough. You’ll be surprised by the results of employing this strategy.
Tip #4: Use an accounting software
We understand that some of you may be more comfortable using a manual ledger to keep track of your business expenses and monitor cash flow, but trust our word – using an accounting software is all much better.
You can easily keep track of your income and expenses, manage invoices, store receipts and client/customer information in digital format, regulate your inventorying process, generate payrolls and you can do a lot more with it.
These accounting software also don’t cost you much in setup and some are also available for free.
We would recommend QuickBooks Simple Start.
A BONUS tip…
A bonus tip:
Hire an accounting pro.
They can manage all your finance related operations, while you can focus on strategizing how to serve your customers better. If you don’t have enough budget to pay for an accountant’s monthly wages, perks and can’t spend money on their training, you can instead outsource your accounting operations. It’ll cost you a lot less.
Looking for more helpful tips on how to efficiently run your small business? Check out our information treasure chest, learn about our small business assistance service and you’ll find plenty of relevant information there.
Good luck with your small business.