Owning and operating a small business is the dream of many people across the globe. The freedom to control your own schedule, to pursue your passions, and (perhaps most importantly) to take home a far greater piece of the pie at the end of the day.
But as great as that sounds, there are a number of things to take into consideration and the line between success and failure is razor thin. Mishandling or mismanaging the financial aspect of your business can lead to disaster quickly if left unchecked.
Being responsible with your money when you own a business is the most important aspect of owning said business and will help not only keep your doors open but get your business to thrive.
Expenses, Expenses, Expenses
When first starting your business, it is imperative to keep your fixed expenses as low as you possibly can. Planning your large expenses a year in advance – things like rent, taxes, payroll, interest, debts, cost materials for goods and products, utilities, or any other operating expenses can help you to reduce the financial burden.
The goal is to keep your cash flow strong even in tight months and managing your expenses as thoroughly as possible helps to maintain and manage that flow.
Keep Bank Accounts Separate
One big mistake that small business owners make is not distinguishing their personal bank account from their business bank account. This works positively for you on a number of fronts. Firstly, it helps to keep your tax ascertainment straightforward. You will know what was a personal expense versus a business expense.
Secondly, it will prevent you from using business allocated funds for personal use. This is one of the quickest ways for your business to find itself short and is something to avoid at all costs wherever possible.
Invest in the Right Technology
Things like having an online presence – more specifically, e-commerce where applicable – are highly important and worth investing in if the potential to attract more customers is there. Most importantly, invest in bookkeeping software to help you with taxes and to give you a complete understanding of your business.
Keeping track of your books electronically gives you flexibility and convenience and allows you to always know where your finances lay, what you need to account for, and help you to prepare for bills or upcoming bulk payments, never leaving you surprised. Of course, this is a good idea. However, some businesses prefer to outsource the financial side of their business to accountancy firms like Pherrus. They take care of their bookkeeping and their taxes, allowing the business owner to get on with other important aspects of growing the business. Consider outsourcing this job.