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8 Financial Management Tips for Small Businesses
Running a small business is already challenging on its own, but managing the financial side of it is on a different level entirely. The problem is, you can do very well in selling your product or service, but a slip-up on finances can take even the most established business down. Fortunately for us, there are ways in order to manage your finances properly—and that’s what we are going to talk about today.
Here are our tried-and-tested financial management tips for small businesses like yours:
Separate your personal expenses from your business expenses.
There’s your money, and then there’s your business’ money. Mixing these two together will create confusion, tax issues, and simply let you eat into your capital without you even meaning to! Save yourself the headache by setting a personal budget and a business budget. And should there ever come to a need that would force you to tap into your business budget, then we recommend applying for various personal loans no credit check options online.
In relation to the previous tip, one of the main reasons why entrepreneurs spend their business budget on personal expenses is because they don’t earn money for themselves anymore. They devote all their time and resources to their business that along the way, the lines get blurred. We know it can be challenging to manage, but do separate your business time from your personal time, and don’t forget to pay yourself the rate that you deserve. Remember, one of the main reasons why you put up a business in the first place is to improve your quality of life. Not worsen it.
Take care of your bills a few days before they are due.
Small business owners lead pretty hectic lives so it can be easy to miss a due date or two. The problem is, they can incur late payment fees, higher interest rates, and simply extra expenses that should have been otherwise saved for other things. This is the reason why we always make it a point to schedule all our due dates appropriately and set a notification for them a few days before they are actually due. In this way, there’s still some wiggle time should any unexpected meeting or event fall on your due date. Better yet, you can sign up for your bills to be auto deducted from your bank account so you won’t have to worry about anything anymore.
Track all the money coming in and out.
The only issue that we have noticed when you opt for auto deduction is that it can be easy to forget about all those money coming out of your account. However, as a business owner, it is very important to track all your earnings and expenses in order to determine the investments that help you increase your ROI or those that are dragging your business down. Aside from that, keeping a finance log will also help you in managing your inventory later on.
Hire a bookkeeper.
Anyway, one of the biggest headaches of a small business owner is filing taxes. The best way to go about this and make the entire process easier is to simply hire a bookkeeper to do your taxes for you.
Take an intro class into Accounting yourself.
Speaking of hiring a bookkeeper, even if you have someone to rely on to do your taxes right, in the end, it is still infinitely better (and safe) to do your taxes on your own. For this, we recommend taking an introductory class to Accounting. Don’t have the time or energy to go to an actual institution? There are a lot of classes you can take online at your own pace and time.
Sit down with your bookkeeper each month to do the books.
And even if you already know how to do it on your own and would still want to hire a bookkeeper, then the safest route is to schedule sit down sessions with him to go over all of your accounts every month. Not only will this give you much insight into the financial state of your business, but it will also help you spot potential financial crime.
Finally, just be smart in handling your expenses. You don’t have to collect an album of coupons, but it could help to purchase office supplies in bulk and take note of the days when you can get the best rates for them. You can also consider buying second-hand office equipment especially when you’re just starting out, or better yet make use of your existing resources so you won’t have to spend on anything anymore. As for your personal expenses, just do your best to live within the lifestyle you can afford.
In the end, managing your finances shouldn’t be too hard as long as you have designated a separate budget for your business and you stay on top of everything that’s going on financially.
Lidia Staron is a part of the Content and Marketing team at OpenLoans.com. She contributes articles about the role of finance in the strategic-planning process.
This article does not necessarily reflect the opinions of the editors or management of EconoTimes.