Are you passionate about your business, but find yourself procrastinating when it comes to finances and administrative details? You are not alone! Many small business owners feel over- whelmed and don’t know where to start with finances and record-keeping. They end up putting off or ignoring the financial part of their business. You can’t be in control of your business if you don’t know what’s going on.
To turn your endeavors and hard work into a successful, thriving business you need a clear picture of your profits and expenses.
Here are 5 financial tips to help you make the most of your business income:
Separate business finances from personal finances
Handling your business income and expenses separately will allow you to get an accurate picture of how much money your business is making.
The simplest way to do this is to open a separate checking account that you use only for your business. All of your business income should go into this account and any expenses for your business should be paid out of this account. To make your life easier (who doesn’t need that?!) open the account at the same bank as your personal account.
Schedule payments to yourself on a regular basis – it doesn’t matter if it’s weekly, bi-weekly or monthly, but decide on a regular schedule and try to stick to it. Avoid using the debit card or writing checks for your groceries or to Target out of your business account. The only deductions from the account should be for business expenses. If you don’t have a separate account, open one this week. It can be in your name, or in your business name.
Allocate time for finances & record keeping
Schedule time on your calendar each week for working on your financials and administrative tasks. Do you find yourself procrastinating on these items? If so, do them on Monday! Getting things you dread out of the way at the beginning of week frees up your week mentally to know these tasks are out of the way.
It’s important to know where the money in your business is coming from and where it’s going in order for your business to succeed. Staying up to date on your financial records gives you this peace of mind.
Adopt good financial habits - Avoid business debt
What exactly are good financial habits for your business? The same good habits that work for your personal life - balance your checkbook, don’t overspend, follow a written budget, keep an emergency fund, and avoid debt.
Keep track of all financial transactions, including all expenses and revenue received, and use this information to determine your profit and loss statement. This is valuable information that you need to run your business, know where you stand at all times, and keeps it operating in the black. Poor financial habits can put a business on a path to failure.
Simplify your business structure and record keeping
Don’t be in a hurry to form a corporation, LLC or partnership. Sole proprietorship works for most start-up businesses. Sometimes small business owners try and complicate things before they need to.
The same goes for accounting and record keeping methods. For many start-ups a simple spreadsheet and plastic filing box will suffice. As your business grows you can invest in accounting software or consider outsourcing the accounting function.
Entrepreneurs are the CEO, CFO, COO, and every position in between! Making an investment in your professional development is making an investment in your business.
If you feel that you like enough financial knowledge to run your business's accounting department, it's time to invest in some simple education in the form of books, podcasts, or conferences. It's amazing how a few hours with a topic can make you proficient!
I hope you find these tips helpful! Let me know which of these you're going to focus on!