Managing Your Small Business Finances in the New Year
By definition, being an entrepreneur means taking on a lot of financial risk. That’s why it’s surprising that not all small business owners are as on top of their finances as they should be. When it comes to running a successful business, keeping your finances in order is of the utmost importance.
With the end of the fiscal quarter and year approaching, Entrepreneur recently shared tips for handling your business finances. Many entrepreneurs are content to take on the challenges of running a small business all by themselves — including running the numbers. However, that is not always the best approach. Let’s take a look at some tools and tricks that will help you keep your business financially on track.
The first step to sorting out your business finances is to ensure that they are separated from your personal finances. For both tax reasons and for operation sake, your business should have its own bank accounts and credit card. If done properly this will make figuring out what expenses go into much column much easier.
Today managing your business financials is easier than ever thanks to a number of accounting software platforms. Each one of these programs offers unique features that your business may or may not need. As a result it may take some time and research to find the one that’s right for you and your business but it is definitely worth the effort. I recommend a cloud-based solution, such as Quickbooks Online or Xero, as opposed to a localized one so that you can utilize reports and monitor your money whether you’re at the office, at home, or in Aruba, for that matter.
While these bookkeeping programs are great there are some business owners who are just not great with numbers. In that case it may be worth hiring a professional accountant. Not only will hiring a pro help put your mind at ease but will also free you up to handle some of the more enjoyable aspects of your business. That being said, it is still important to keep in contact with your bookkeeper so you understand the financial state of your business and aren’t in for any rude surprises.
Speaking of surprises, knowing how to handle them is a financial virtue. By creating a budget and planning out your spending (and leaving room for the unexpected), you’ll be better suited to weather any blows. Just like creating a personal budget, it’s good to figure how much your business can afford to spend each month, quarter, or year on various items. This will allow you to make better financial decisions and see where you can make changes to maximize profit.
Getting your business finances in order is vital for the future of your business. Once you have a better understanding of how much your business spends and brings in, it will enable you to make better long-term decisions. So before getting bogged down by the holidays or other end of year business, follow these tips and get your small business finances in order now.