Keeping your business’ cash flow in order is a daunting yet necessary task. Not only does it allow you to anticipate and prepare for budget-related problems, but it’s also important to come tax filing season. A lost receipt or untracked accounts payable can have severe financial consequences and put you in the Internal Revenue Service’s crosshairs. But how does one keep up with their growing accounts and, along with it, paperwork? Here are seven tips for keeping your business finances in check.
Don’t Put it Off Until the Last Minute
Procrastinating is one of the worst things you can do for your business. Taking an hour of your day to review and update your accounts receivables and payables, payroll, etc. can go a long way. If you lack the financial expertise, there are tools out there that can help manage it for you, such as QuickBooks. Holding off on doing the accounting side of your business won’t make it go away. Rather, it will just get bigger and more intimidating.
Break it Into Smaller Pieces
The bookkeeping for small and medium-sized businesses are actually very straightforward. Break everything down into smaller, more digestible chunks. Categorize your expenses into inventory and supplies, legal fees, paying workers, and sending out invoices. Doing so makes the entire process more manageable and less intimidating, which removes the temptation of putting it off.
Utilize Existing Solutions
This is a particularly common issue with tech startups and those employing developers in their workforce. It can be tempting to have every piece of software that the business uses to be developed in-house. Unfortunately, this is a huge productivity-zapper and time waster. Rather than directing your manpower and talent to build internal apps from scratch, utilize solutions that already exist and have your key employees focus on tasks that cannot be duplicated.
Take Advantage of Technology
Adding to the previous tip, it is ideal to capitalize on available technologies to get your business’ finances in check. In a survey conducted by GoDaddy, over half of the interviewed small business owners admitted to failing to use technology to help them with their budget and expenses, despite the risks involved. Aside from QuickBooks, there is a fleet of accounting software out there that you can use to manage expenses on your own. This includes Zoho Books, Billy, Xero, and Wave.
Work With Experts
Financial experts, such as Xcela Wealth, can help you properly manage the accounting side of your business by precisely tracking income and expenses, reviewing these expenses and fine-tuning where it goes and making financial projections that can uncover any potential hurdles you should prepare for. Price-wise, financial experts, like Xcela Wealth, will cost you anywhere between $300 to $500 an hour, but don’t be afraid to ask for discounts. While it doesn’t work every time, you’d be surprised by how frequently companies are willing to meet you halfway to get your business.
Practice Good Bookkeeping Habits
One simple tip that cannot be overemphasized is to keep your business’ bank accounts separate from your personal accounts. Mixing business with personal finances isn’t exactly illegal, but a habit that is definitely frowned upon and should be avoided as it could lead to unexplained expenses and a more difficult tax-filing process. Another habit is to avoid hefty legal fees. Legal services are something you cannot escape when you’re trying to build a business, but make sure to only be paying a reasonable amount.
While it does feel good to be writing checks to yourself on a weekly or bi-weekly basis, don’t let it go to your head. Maintain a frugal lifestyle and set your salary to the lowest possible amount. If you have employees, only provide benefits that are mandated by the government, at least until your business starts to take off. The more savings you have, the more flexibility you get during those lean months when profits are lower than expenses. Lastly, keep your travel costs to a minimum. Any hotel and travel expenses incurred should be spent only on a place to stay for the night while you attend meetings during the daytime. Remember, you’re there to talk about your business, not to take a luxurious vacation.
Another great way to learn and master how to keep your business finances in order is to read about other entrepreneurs and financial experts. Interviews with financial advisors about Xcela Wealth, for instance, can open your eyes to new and clever techniques for minimizing legal fees and maximizing tax deductibles.