Something that many people would love to do with their lives is own a business. You get to be your own boss, set your own schedule, and choose what types of things you can focus on day in and day out.
Of course, there are some challenges that come along with running a business. You need to market yourself well, create a strong product, hire the right team, and do so much more. However, arguably the most difficult part of running a business successfully is managing your finances. Incorrectly managing them and going about things the wrong way could spell the end of your business very quickly.
With that in mind, this article is going to go over some tips and pieces of information to help you manage your small business finances as best as possible.
Use the Right Software, Services, and Apps
Today, managing your business finances is often best done with the help of apps, software, and professional services. Many are quite affordable, and they are generally user-friendly, as well. There are services that can do everything from sending credit repair letters to disputing inaccurate negative items, automating your processes, tracking your spending, scanning receipts, and so much more.
Of course, you don’t need them all, so do some research and decide to use and buy a couple that make sense for your business and what you need assistance with. These can streamline and simplify your financial management, especially if you were planning on doing everything manually.
Have a Budget
Next, one of the best tools to help you manage your business finances is a budget. This will track how much you have coming in every month, as well as what you are spending money on. Having a budget can help you monitor your spending, keep track of your bills, and ensure nothing is missed.
Of course, be sure to update your budget frequently with correct numbers. A quick glance at your budget should help you see the financial health of your business and how well you are doing. A budget can also help identify if you are spending too much in a given area, and allow you to see your income growth or decline over time.
You can have a pen and paper budget, but there are several apps and programs out there that make it easy to update your budget, track it over time, and check it anywhere.
Consider Working With a Professional
While there are many tools out there to help you manage your own business finances such as our free bookkeeping templates and full financial projection templates, it is often a good idea to bring in a professional to handle the bookkeeping. Business owners need to focus on a lot, and trying to juggle all of it can be a lot.
The more you need to focus on and deal with, the greater chance of you burning out or making a costly mistake. Working with a pro allows you to focus on the operations of your business and ensure you deliver the best product/service and customer service possible.
Sure, it will cost you more than doing it yourself, but the results often speak for themselves, and it will take a lot of work off your plate, too. Each company is different, so weigh the pros and cons of bringing in a pro for your specific business.
Plan and Prepare for Tax Time
Whether you are handling your own finances or working with a pro, tax time is without a doubt one of the most crucial times of the year. You need to be preparing for it all year long and need to do all you can to make sure it goes off without a problem taking place.
Ensure you keep all of your necessary receipts, enter all the right numbers, and make sure everything is reported as it needs to be. There are many common tax penalties for small businesses, and the last thing you want is to get hit with one. You want to be in the good graces of the tax man, so do all you can to plan out and prepare for your taxes each and every year.
Borrow Money Intelligently
In many cases, a business will need to borrow money at one time or another. Unless you experienced some major success early on, had capital from the start, or got an investor, taking a loan as a business is common.
You may need money to buy materials, lease office space, get equipment, or for various other reasons. But when you borrow the money you need to do it intelligently. Only borrow what you need, and ensure you have a plan for how to repay the money on time and in full. Creating detailed financial projections can also ensure you borrow or raise exactly what you need and that the business can handle repayment. Learn more about how business loans work and how you can increase your chances of approval here. We even wrote a detailed article on getting a business loan during a recession.
Also, make an effort to find the best deal possible, and shop around. Of course, in order to borrow as effectively as possible, you need to have good credit. Good business credit means you will be able to get a better interest rate and more favorable terms, which has the potential to save you a lot of money down the line. Thankfully, building your business credit is totally possible and is worthwhile if you currently don’t have the best credit.
In conclusion, these are some of the best tips for helping small businesses manage their finances. Without properly managing and tracking their finances, a business will find it hard to stay afloat.