It’s the American dream. Owning a small business can be one of the most rewarding careers, and having a strong system of managing business finances can turn your dream into a reality.
Controlling the finances of a small business can feel like a full-time job on its own, but you don’t have to have a financial background to become a savvy business owner. Learning business accounting basics can make all the difference in managing your business finances and having total control of what comes next. Whether you finally want to give your business idea the green light or need some help getting your current small business financially fit, here are some tips that you can start using today.
Don’t Mix Business with Pleasure
Even if you think you have great organization and self-control, your business finances should always be kept separate from your personal finances. Get yourself a business credit card and use it exclusively for business related transactions.
Cash flow can be hard to determine when your business income and expenses are mixed in with your personal finances. By opening a separate personal or business account to keep track of your money, it will save a lot of time and help you to avoid extra headaches during tax season.
Partner with a Local Credit Union
Since you’ll be keeping your business and personal finances separate, consider opening your business account with a customer-first company. Credit unions are crucial to small businesses because they are much easier to partner with when it comes to qualifying for loans and finding affordable loan rates.
These non-profit financial institutions are usually locally based and operated within a few locations, but they cater greatly to their local community and its small businesses. Other perks of partnering with a credit union include faster turnaround for most services and impeccable customer service, which makes running a business much smoother. Search for credit union locations near you and find out if your business qualifies for membership.
Manage Your Accounting
No matter how you want to go about it, managing your financial activity will help you to keep track of all of your business transactions and monitor where all of your resources are being allocated.
There are a ton of great accounting software options that can keep your business organized. These tools can help you to take control of your finances by creating invoices, processing payroll, collecting payments and generating financial reports. Research the different options and decide what works best for your business and how much you’re willing to spend on software.
If directly managing your numbers isn’t something you want to take on personally, hiring a bookkeeper can be your best option. This can eliminate a lot of tasks from your schedule and ensure that your records are constantly being fine-combed by someone whose job depends on it. Of course, you shouldn’t just assume that your bookkeeper could make important financial decisions for your business, so it’s imperative that you have a strong foundation of financial principles and can understand the work that goes into tracking your records.
Talk to the Right People
While your business software or bookkeeper can do wonders for your day-to-day finances, you should have a financial professional take a look at your business at least once a year. A lot of CPAs and accountant professionals offer free or minimally charged consultations so that you can have a conversation about your business and its future, so take advantage of shopping around until you find the right fit.
An accounting professional not only helps with handling any current tax questions, but they can assist with filing, planning and paying taxes for this year and the years to come. Working with an accountant can be the center of little and big picture planning for your small business, and both are necessary for long-term success.
Build a Budget
Having a spending template can make a difference in the way you look at your business. You don’t have to measure out every penny and starve your business with a financial diet in order to have a successful budget. A budget should serve as a guide and a way of tracking where you want to see your spending and comparing it to where you actually see your spending
Having a budget can help with determining where you need to cut back expenses and where you can consider giving out a little more. If you don’t think you’ll effectively be able to predict your spending long-term, set up monthly budgets until you learn your spending and can forecast what it will look like over the next quarter or year. Of course, your accounting resources can make this easier, but taking charge of your budget personally is a great way to sharpen your financial skills.
You may be the driving force behind your small business, but you don’t have to take on everything by yourself. By using quality financial resources and continuing your own financial knowledge, you can easily manage your business finances and spend more time making your dream come true.