As a small business owner, there are a lot of things that you have to think about. One area where many entrepreneurs fall short is their finances.
Let's discuss the dos and don'ts for managing your money as a small business owner so that you can focus on running your company instead of constantly stressing out about your finances.
DO Your Research
One of the most important things that small business owners can do is conduct research. Don't be afraid to call people up and ask for advice on how they handled certain financial matters when running their businesses. You will likely find that many successful entrepreneurs are more than willing to share tips with you because they truly want your company to succeed.
It's most definitely worth seeking the advice of a/an accountant/consultant/advisor because they will have a lot of insight to offer that you might not be aware of. They can help you to prepare for the unique financial challenges and pitfalls of the market you are entering and understand the position that your company is in.
DON'T Overlook Your Business Plan
One of the most important things that you can do as a small business owner is to create and follow a business plan. Don't let yourself fall into the trap of thinking, "I don't need one because I am only starting out." Even if you are an extremely small company that is just beginning, a business plan will help you to stay organized and remain on top of your finances.
It's important to have a written document so that everyone who works with you knows where the money is going and what they can expect from your budget. As time goes by, new opportunities may arise for expansion, new hires, or other changes in the company. A business plan will help you to keep track of all these things so that you can make good decisions for your company's future.
DO Create a Realistic Budget
Another important thing that you can do as a small business owner is to create and follow a realistic budget. You should make sure to include all of your income, expenses, debts (including the interest rate), and savings in this document so that you know where your money is going at all times throughout the year.
DON'T Forget to Track Your Expenses
As a business owner, you need to know how much money is coming in and where it's going. Don't let yourself be blindsided by spending too much or underestimating income. You should always have a plan for your money and track every expense so that you know exactly how much you’re spending.
Using software like Dext can help you to track your expenses easily. You can even upload your receipts via your smartphone camera, so it really couldn't be easier to track your expenses on-the-go.
DO Have a Tax Plan
Another important thing that you can do as a small business owner is to have a tax plan. You should meet with your accountant/consultant/advisor and create an effective strategy for how you will pay taxes throughout the year so that everything runs smoothly and on time.
By doing this, you will avoid late fees or penalties from the authorities which could damage your company financially in the long run. On top of this, careful tax planning will also help you to save money on your bill and take full advantage of any incentives and breaks available.
DON'T Try to Do It Alone
As a small business owner, you juggle many different things at once - and the thing about juggling is that it's exhausting, and very easy to let balls drop.
Rather than attempting to manage your finances yourself, it's better to hand this responsibility over to a professional who will be able to apply their years of training and experience to the role. This not only puts your business in better financial shape, but also frees up your time and attention to focus on growth and client generation.
Summary
Good financial management is crucial for business success, so make sure that you follow these dos and don'ts carefully. Preparation is key and expert advice really does make all of the difference when it comes to keeping your finances in tip top shape.