Running a business is hard. You have to manage a staff, produce a product people want to buy, and fix any problems that come up along the way.
With everything you have to manage, business finances can start becoming a problem.
When 29% of businesses fail because they run out of cash, you need to make sure that this doesn't happen to you.
So how can a small business track their finances? We'll tell you how to manage your small business financial matters in this post.
Keep reading to learn seven ways you can help keep your business finances under control.
1. Go Digital
Are you drowning in paperwork? If you're still using paper to keep track of your finances, you're doing things the hard way.
When you're dealing with paper, you will have a harder time finding what you need. Sure, you can sort everything. But that doesn't reduce the time it takes to find something by much.
When things are digital, it's easier to keep track of and find what you need. Instead of digging through paper, you can run a search on your accounting software to find the information you're looking for.
You are not dealing with the cost of paper. Have you kept track of how much money you're spending on paper and ink every month?
If you handle a lot of transactions, your costs could spiral out of control.
As a small business, you need to save money wherever you can. Removing paper is one of the first areas to cut costs.
2. Do Regular Expense Audits
It's easy to control large expenses. You have a single choice that you need to consider. You look at your income and potential benefits of the purchase and make your decision.
Things get more complicated when you add up all your small purchases. If you don't keep these in check, things can run away from you.
Make sure you do regular audits on your expenses so you can catch the smaller costs that might slip your mind.
Small purchases don't seem like a lot when we make them. But when you add everything up, you can end up with a significant monthly expense that you didn't plan on having.
3. Use the Right Software
You don't need to keep track of all your financials on paper or in spreadsheets anymore. There is a lot of software available that can make your life easier.
Business software today takes out most of the manual work required for tracking your income and expenses. It does this by connecting directly to your bank account.
When accounting software syncs up, it will record all your transactions for your credit cards and checking accounts. Once it has this data, it will move everything into categories for you.
If you need to send invoices, many accounting programs will do this for you too. Instead of waiting for a check every month, you can accept payments online.
If you are running a specific business like a franchise, there are franchise accounting software options available to handle the specifics of that business model.
4. Hire an Accountant
If you don't have a financial background, you will probably be spending more time than you need to keep your finances in check. In these cases, it makes more sense to hire an accountant to handle these things for you.
You don't have to bring someone on full time. There are many professional services that you can keep to handle your finances for you.
Hiring an accountant won't only save you time. They can also find mistakes and save you more money in the long run.
An accountant will also be able to find areas where you can cut expenses and take deductions on your taxes.
Many services won't require long-term contracts. Before you dismiss hiring a company to help, try one and see what they can do first hand.
5. Negotiate With Vendors
Have you been with your ISP for a long time? Or are you getting ready to make a large order with a manufacturer?
Before you sign your contract or continue payments, talk with your vendors to see if you can get a better deal.
If you have many options for your building utilities, then talk with other companies to see if they can offer you a better rate than your current choice.
Once you have some offers in place, talk with your current provider to see if they can beat their competitors.
When you are buying supplies, see if you can get discounts for buying in bulk. Most vendors will offer discounts when you put in large orders.
6. Don't Overlook Taxes
Taxes are complicated. If you aren't careful, you can end up with a hefty bill at the end of the year.
Make sure you understand your tax obligations. Your tax rate and fees will change based on how your organization is structured.
If you are self-employed or run an LLC, your taxes are passed through and considered individual earnings. You must file your business income with your regular wages at the end of the year.
If you form a corporation, you will need to take into account business taxes and personal taxes from wages.
If needed, hire a tax professional so you can get your tax situation sorted out.
7. Keep an Emergency Fund
Before you buy the next best thing that will help you grow your business, make sure you have money set inside in case things don't turn out as you planned.
Having an emergency fund will make sure you can keep operating your business when disasters happen.
Keep in mind that you can experience financial hardship because of business growth.
If you have a big increase in orders, how are you going to fund them? Are all your customers going to pay you on time?
Make sure you have enough cash to cover your business to handle things when your business starts growing faster.
Keep Your Business Finances in Order
Running a small business is hard enough on its own. If you don't keep your business finances in order, you'll end up making even more work for yourself.
Follow the seven tips above to make life easier for yourself.
Are you looking for more business advice? Head over to the Finance section of our blog to read our latest posts on the subject.
