3 Steps to Managing Finances for Your Small Business
Managing finances can be challenging for any small business. If you work as a solopreneur, with lines blurring between your personal and professional lives, financial management can be even more challenging.
However, responsible financial management for your business doesn’t have to be overwhelming. The key to success is implementing a workable financial system — by consulting with an accountant or bookkeeper — and following a few simple steps for everyday management.
These three rules will give you a strong start in organizing and maintaining your business finances:
1. Keep Business Expenses Separate
Even if you work from home and have no employees, your business is a business and should be treated as such. That means you need a business bank account that’s separate from your personal account, and all business expenses and income should go through that account.
In addition, consider opening a business credit card to keep track of expenses, and a business savings account for monthly deposits, which can be used to pay taxes. If your business and personal finances are conflated, it’ll be difficult to report income properly and justify business-related tax deductions.
2. Reduce, Reduce Reduce
In your personal finances, you may be prone to splurging or making unplanned purchases. But to keep your business afloat through inevitable ups and downs, you need to continuously look for ways to cut costs and work on expense reduction. For instance, try to negotiate lower rates with your phone and Internet service providers as well as credit card processors. Also consider using contractors rather than employees (when you can) and purchasing supplies in bulk or when on sale.
3. Take It to the Cloud
Many modern small businesses work on the go, performing services and deliveries off-site and conducting office work in coffee shops, airports or anywhere else there’s Wi-Fi. If you’re working in various settings, manage your business finances from any possible location to avoid getting behind on bookkeeping, invoicing or paying bills. A variety of small business financial management software programs are cloud-based, making it easy for you to send an invoice or accept a payment from wherever you are.
When it comes to running a small business, managing finances is a crucial task, but it doesn’t have to be difficult. Take these steps to get started in the right direction.
On – 28 Feb, 2017 By Nancy Mann Jackson