Running a small business is tough for a lot of reasons. From networking and marketing to financial record keeping and inventory management, there’s a wide array of things you have to handle. Most small business owners I talk to find properly managing their finances to be the most daunting. So, let’s take a look at some of the basic pieces.
Operating your own small business is no easy feat! One of the first things I advise clients on is keeping personal and business finances separate. Having a business account for all of your business-related expenses will simplify year-end tax preparation, allow you to see monetary growth, and give you control over your expenses. When business owners mix their finances together it becomes difficult to get a quick glance of how cash is flowing in and out. Not to mention, business accounts have some great perks that are designed to benefit small business owners.
Another important financial aspect is to set a reliable Accounts Payable (AP) system. Every small business is unique, and therefore costs associated with every small business are unique. But, no matter the type of business, it is essential to have a system in place to pay all of your vendors, overhead, and bills so your business can remain functional. I encourage clients to look into simple AP systems to automate the process. Here is a great article to give you somewhere to start!
Getting paid for your services or products is vital to your business. That is why you need to establish a set list of payment types you will accept and clearly communicate the information to clients. Are you going to accept credit cards? If so, which ones? If you are going to take checks, who do people make them out to? If you are going to use Stripe or Paypal, are you aware of their fees? This will streamline the flow of cash into your business.
While I highly recommend hiring a professional like myself to handle your bookkeeping, there are some business owners who want to handle it themselves. Bookkeeping ties all of the financial pieces together, making it extremely essential to your business’s success. Always ensure that you are taking into account every financial activity your business engages in—your business account, expenses, payments to your vendors, and revenue. This holistic approach will help you truly understand the financial health of your business.
Whether you have been in business for years or are getting ready to open your doors, beginning to understand the different pieces that make up your small business finances are key! I offer financial consultations and I am always happy to help business owners understand their finances. Contact me today to find out how I can help your business!