Running a small business is no easy task because there are a million things to keep track of, and if you’re not careful, your finances can quickly get out of control.
But with a little organization and planning, you can stay on top of your expenses and income, and keep your business running smoothly.
Keep track of your income and expenses
The first step to managing your finances is knowing where your money is coming from and where it’s going. Track all of your incoming revenue and outgoing expenses, so you have a clear picture of your financial situation which will help you make informed decisions about how to allocate your resources.
On the other hand, if you’re not tracking your income and expenses, it’s easy to lose sight of where your money is going and make careless mistakes that can cost you dearly in the long run. For instance, you might not realize that you’re spending too much on office supplies or that you’re not charging enough for your products and services.
Therefore, one of the most important things you can do for your small business is to create a budget and stick to it. When you have a budget, you know exactly how much money you have to work with each month, and you can allocate your resources accordingly.
Hire the accountant
While it’s important to keep track of your finances yourself, it’s also a good idea to hire an accountant to help you with the nitty-gritty details. To make sure that all of your financial records are in order and that you’re paying your taxes on time, the accountants use their expertise to give you peace of mind and save you time and money. They can also offer valuable advice on how to save money and invest in the future.
Additionally, an accountant can help you set up a budget and track your progress over time, so you can see where you need to make adjustments.
Set aside money for taxes
Self-employed individuals are responsible for paying their taxes, so it’s important to set aside money each month to cover your tax liability. This can be a difficult task, but there are a few helpful tips to make it easier.
First, calculate your expected tax liability for the year using the IRS’s online calculator. This will give you an idea of how much money you need to set aside each month.
Then, open a separate savings account just for taxes and make automatic monthly transfers from your business account to this account. This will help you avoid the temptation of spending the money on other things, and it will make it easier to come up with the money when tax time rolls around.
Finally, consider hiring an accountant to help you with your taxes. They can ensure that you’re setting aside enough money each month, and they can help you file your taxes when the time comes.
Make a plan for slow times
Every business has its ups and downs, so it’s important to have a plan for how you’ll manage your finances during the slow times. This might mean taking out a loan or cutting back on expenses, but whatever you do, make sure you have a plan in place so you can weather the storm.
If you’re not sure how to make a plan, talk to your accountant or another financial advisor. They can help you figure out what steps you need to take to keep your business afloat during tough times.
For instance, you might want to consider taking out a business line of credit. This can give you access to cash when you need it, without having to put up collateral.
Create a system for invoicing and payments
If you’re not careful, invoicing and payments can quickly become a chaotic mess, so you should start by creating professional invoices for your products and services. Include all of the relevant information, such as what was purchased, when it was purchased, and how much is owed. Then, make sure you send invoices out on time so customers can pay on time.
Next, create a system for tracking payments. This might mean setting up automatic payments, using a software program, or simply keeping a meticulous paper trail. Whatever you do, make sure you have a way to keep track of who owes you money and when they need to pay up.
Finally, consider using a service like Shift4 Payments to process payments as this can save you time and money, and it can make it easier for customers to pay you.
Small business owners have a lot on their plate, but by following these seven tips, you can make it a little bit easier to manage your finances. By hiring an accountant, setting aside money for taxes, and creating a system for invoicing and payments, you’ll be well on your way to keeping your business running smoothly.
Additionally, make sure you plan for slow times by having a backup plan in place.
Don’t let the stress of financial management get you down – use these tips to simplify the process and keep your business moving forward.