Business Owners: Be Smart With Your Finances
We hope you enjoy this guest article from Brittany Fisher, an accounting expert with FinanciallyWell.info.
Everyone needs to be careful with their finances, and new business owners are no exception to that rule. Analyzing financial reports can highlight problem areas, so timely and proper bookkeeping practices are a vital part of keeping your business healthy.
WHICH FINANCIAL TASKS ARE DAILY PRIORITIES
Keeping track of your cash flow daily is crucial. You’ll need to know both when you expect to receive funds and when bills are due, and in what amounts.
• Make regular deposits and reconcile those amounts with your sales figures.
• Check bank account balances.
• Ask employees for input on things your company needs soon.
HOW CAN YOU SPEND WISELY?
While you do have to spend money to make money, you need to be careful not to spend carelessly.
• Make a realistic budget and stick with it.
• Don’t spend money on unneeded services or items.
• Put money into savings regularly.
• Look for better prices on your inventory, insurance, internet, and similar categories.
• Pay your bills on time.
• Don’t charge more on credit cards than you can pay at the end of the billing cycle.
ARE FINANCIAL ISSUES AS DIRE AS THEY SEEM?
Remember that sales can fluctuate. If your bank balance isn’t as large as you’d like, look at your forecast. You’ll probably be seeing more revenue soon.
Hiring a professional to evaluate your business’s finances can provide solutions and give you peace of mind.
HOW CAN YOU KEEP UP WITH TAX RESPONSIBILITIES?
Tax requirements vary depending upon the type of company you own. Most businesses have weekly, monthly, quarterly, and yearly taxes. You might have:
• Sales and Use tax
• Franchise/ Excise tax
• Personal property tax
• Property tax
• Weekly/ monthly/ quarterly payroll tax
• Income tax
Enter tax due dates into your calendar and accounts payable. It’s a good idea to set money aside for these payments so you’re not scrambling for funds when they’re due.
Regularly check tax laws to be sure you’re maximizing your deductions and making wise long-term decisions.
DO YOU NEED BOOKKEEPING HELP?
It’s important to keep daily tabs on your finances, but that doesn’t necessarily mean that you have to break out your calculator and pencil. Lots of bookkeeping software is readily available, and some of it integrates with CRM platforms. Choose software that will meet your business needs now and is scalable for future growth.
If you don’t have enough time to do your own bookkeeping, consider hiring an employee, a bookkeeping service, or an accountant. Many businesses rely on a combination of in-house and outsourced financial personnel.
DO YOU NEED MORE CAPITAL?
If your cash flow is low, it might be time to look for a business loan or investors. Either option can bring an infusion of funds into your business. You’ll need to create a sound business plan that includes an explanation of why your cash flow isn’t keeping up with your expenses and how you plan to remedy that.
Most investors prefer the structure of a corporation rather than an LLC. Each state has its own regulations, so check to see what’s needed in California if you decide to form a corporation. You won’t need to hire an expensive lawyer; you can file yourself or use an online formation service.
WHAT HAVE YOU LEARNED?
As a business owner, it’s important to keep up with your financial obligations. Your cash flow should be checked daily. If you need help with your finances, consider hiring a professional.