When it comes to managing your small business finances there’s a lot to take into account. To help you along your journey, here are some do’s and don’ts to consider to keep your business on track.
Do:
Keep Meticulous Records
When it comes to small business management, organization is key. Keeping track of all records can help reduce the likelihood of late payments.
Records can also be useful when tax season rolls around. Deducting valid business expenses throughout the year may help you lower the amount of taxes your business will have to pay.
Organization is also key if you’re applying for outside funding. Banks want to see financial documents and having them at your fingertips can greatly speed up an application.
Be sure to keep your business paperwork safe. Review this article for more information and helpful tips: Paperwork: Safety Tips for the Cyber Age.
Separate Personal and Business Finances
Some small business owners believe that using a personal bank account may reduce expenses and bank fees but combining your finances could result in confusion down the road. When tax season rolls around you might find it difficult to identify personal from business expenses, and as a result might not be able to properly measure your company’s profits.
Set Up an Emergency Fund
Even the best crafted plans sometimes go askew. An emergency fund can help you prepare for any unexpected situations you might encounter in the future. The flow of business may not always be 100 percent consistent but having an emergency fund can be useful if you ever find yourself in a situation where you might need a little extra financial support.
Don’t:
Don’t Spend More Than You Have
When starting a new business, it’s understandable to want to do everything right away and all at one time. However, starting and scaling your business takes time and money. To avoid overspending, have a clear goal of what you want to achieve and outline what the goal will cost you.
If you find that goal will cost you more than you have at the current time, see if there’s another area you can focus that can help bring in the income for the next goal you wish to achieve. A good rule of thumb is to only invest in what you believe will help your company grow.
Don’t Leave Room for Debt Regret
If you’re taking out a loan to kickstart your business, take the time to do your research and find a loan and provider that’s the right for your financial situation. Consider starting with a list of small business loan options and reach out to the providers to explain what you’re in search of in terms of loan amount, explain your monthly repayments capability and discuss the life of the loan.
Debt regret can happen if you rush into an agreement with a provider that doesn’t fit your financial needs. When it comes to your business finances it’s always worth spending the time to think through your decisions.
Don’t Solely Focus on Money
Dedication and love for your company can be some of the best tools to help grow your business. Before spearheading your business venture, make sure your passionate about your company’s mission and proud of its values. While the goal is to monetize your company, having passion for what you’re doing can help overcome the challenges you face and ultimately help fuel your company’s success.
About the Author
Rachel Dix-Kessler is the Consumer Advocate of personal finance comparison website, finder.com. In her role of Consumer Advocate, she analyzes and reports on the spending and savings habits of Americans. Rachel is passionate about studying financial trends in order to provide actionable advice that encourages more people to talk about, and understand, their own personal finances.
