Quick Guide to Managing Small Business Finances
How To Manage Your Small Business Finances
With over 31 million small businesses in the United States, entrepreneurship is the engine of the economy. Coming up with the big ideas and the vision is one thing, but getting a handle on the financial side is another. If you’re passionate about your venture but don’t have a clue about the business finance basics, Your Financial Freedom Journey (YourFFJ.com) offers a few things you can do to get on track.
Officially Register Your Business
When you officially register your business, you’re declaring yourself as an entity, which comes with certain obligations. The process of setting up your business as a corporation or a limited liability company (LLC) can be arduous, but one of the best ways to do it is by using a business formation service. For a small fee, it takes care of the paperwork and ensures that your business is registered in your state.
Have Dedicated Business Bank Accounts
As a business owner, separating your business and personal finances is a best practice. This means not paying business expenses with your personal accounts or even transferring money to them. If you want your business to be one of the 80% to 85% of businesses that survive their first year, remember that your business checking account is for receiving revenue and paying bills, while the business savings account is for building an emergency fund and paying taxes. With dedicated accounts, it’s easier to monitor your cash flow.
Take an Accounting Class
One of the quickest ways to get up-to-speed on your business’s finances is by taking a class. While it may not be possible for you to physically be in the classroom, there are plenty of online platforms that offer free or low-cost classes. Some of these classes may be tailored to specific small business finance issues, such as how to set up payroll or determine your tax obligations. However you choose to do it, investing in your own knowledge base pays dividends in the long run.
Choose the Right Accounting Software
A report by SCORE found that 40 percent of small business owners agree that tax accounting is one of the most difficult tasks, which makes choosing the right accounting software vital. Many applications not only help with bookkeeping, some also track your tax obligations at the local, state, and federal levels.
Choose the software that fits your needs. For example, trying to keep track of business funds and constantly changing account balances can be complex and not very timely – this information is typically updated only once a day. With software like an account balance API, you can keep an eye on account information by verifying your balance in real time, while also protecting you from overdraft and NSF fees.
Hire or Outsource It
If handling your business’s finances is still a struggle, outsource it to a professional or hire your own. Approximately 37% of small businesses outsource their accounting, according to Fortunly, and over 60% of small businesses have their own in-house accountant. There are platforms dedicated to helping businesses find qualified professionals, or you can check with your local small business center to find someone in your area.
Keep Track of Your Finances
Wearing multiple hats as a business owner is standard, but when it comes to tracking your finances, attention to detail is paramount, as is setting goals. Getting your business bank accounts in order and finding good accounting software is more than half the battle. Use the financial freedom guides from YourFFJ.com to take control of your personal and business finances.
Photo Credit: Pexels
Guest Post by Elena Stewart of ElenaStewart.com
Your Financial Freedom Journey (YourFFJ.com) provides tools to create more financial freedom, time freedom, and peace of mind in your life.
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