When you dreamed of becoming an entrepreneur, you probably didn’t include the hours required to keep on top of bookkeeping and other financial tasks. There are a few steps you can take to keep the books in order easily. Take these steps to help simplify your processes and ease financial stress.
1. Keep personal and business expenses separate
A big financial mistake is to use your personal checking account for business expenses. Doing so may seem simple at first, but over time it complicates things. It makes it difficult to separate out which expenses are which, and you need to know your business expenses so you can properly file your taxes.
If you’re ever audited by the IRS, having your expenses combined will create a logistical nightmare.
To avoid headaches, open a business checking account. In addition to helping out at tax time, this step can help you build strong business credit as well. Check out this blog post for more in-depth information about business credit cards: Six Benefits of a Business Credit Card.
2. Track all business expenses
This important step helps you monitor business growth and determine what expenses you need to report on your tax return. You should track the following:
- Meals and entertainment
- Out of town business travel
- Vehicle related expenses
- Gift receipts
- Home office receipts
If you haven’t done so already, there are countless benefits to tracking expenses by making your business paperless. “Shoebox Accounting” aka throwing everything in a box and sorting it out later, can be confusing and a huge time waster. Create digital records of receipts and important documents. Here are a few tools to help you go paperless:
3. Stick to a budget
It’s simple mathematics yet 29% of businesses fail because they run out of cash. A business budget takes time and effort to set up but it’s key to running a profitable small business. Fortunately, there are many resources to make the process faster and easier than you thought possible. Check out Small Business Budget Templates for Download.
4. Prepare for the unexpected
Unforeseen expenses can come up for even the most organized business owner. No matter if you’re just starting out or have been around for years, you must be prepared. Here are a few types of unexpected business expenses you might face.
- Equipment and Technology
- Employee Costs
- Legal fees
- Shrinkage (caused by employee theft, shoplifting or administrative errors).
Be sure to regularly contribute to a business savings account by building it into your budget.
5. Consider hiring a professional
Finally, if you’re struggling to keep all of your financial balls in the air, consider bringing in reinforcements.
Uber-successful businessman Richard Branson says, “If you really want to grow as an entrepreneur, you’ve got to learn to delegate”.
Accounting is that one area where delegation is essential. You might be losing money without a solid professional in place. If you’ve decided to forgo DIY and hire a professional, review this post on the SmartBiz Small Business Blog How to Hire an Accountant for Your Small Business.