Starting your own business is full of risks and rewards. It’s no secret that you will need to become quite proficient in the ins-and-outs of everything related to your business. You’ll quickly realize the need to master much more than just the product or service your business specializes in, but you’ll also need to master the art of marketing and promotion, sales and managing inventory, day-to-day operations and the list goes on. Of all the tasks involved with your business, your bookkeeping task might be the most important.
Running a profitable business means having a finger on the pulse of your finances and making sure they are managed correctly. For most small business owners, bookkeeping is a daunting task, but it doesn’t have to be. Here are some helpful tips to get you started:
Consult A Professional
Know your numbers! Do you know how much income you need to make to keep your business operational? Do you know your operating costs? If you’re not well versed in either of these, you might want to consult with a local professional bookkeeper or CPA to help. Whether it’s a one-time overview to help you get your business started on the right foot or an on-going partnership, consulting a professional is always a good idea for a new business.
Track & Record Your Expenses
In the same vein, keeping detailed records of your expenses and income will only benefit you in the long run. Knowing your expenses and keeping track of your spending on a daily/weekly/monthly/annual basis will not only help you to know where your money is going, but it will also help you better prepare a budget AND be prepared for tax season. There are any number of options ranging from hiring a certified bookkeeper in your area to manage your finances to buying a simple bookkeeping software. It’s also a good idea to keep a backup of your financial information for safe keeping, if something should ever happen to your computer.
Don’t Mix Business and Personal Accounting
While this seems like a no-brainer, as a small business owner it can get complicated when starting out and profits are not guaranteed. One helpful idea is to open a separate bank account for your business. Reconciling your finances from your dedicated business account is straightforward, instead of trying to wade through the nightmare of figuring out the aftermath of mixing business and personal accounts at tax time.
Save for Unexpected Expenses
Doesn’t it always feel like the unexpected comes at the least opportune time? Having a financial safety net is a great way to cushion the blow of those unforeseeable unexpected expenses. Whether it’s a start up cost you didn’t anticipate, replacing a piece of equipment or not setting enough funds aside to pay taxes or healthcare, having a rainy day fund to pay out of for emergency expenses might make the difference of your business failing or succeeding.
Pay Yourself First
That’s right, pay yourself first. While you first need to make sure that all of your expenses are covered, as an entrepreneur, paying yourself out of the company profits is essentially like investing in yourself. Setting aside some of your profits, can not only allow you to establish your emergency savings for those unexpected expenses, but it can also give you a head start on financing the next phase for your businesses when the time comes.
Bookkeeping doesn’t need to be a dreaded task to a small business owner, in fact, the simpler you keep it, the more manageable it is.With some practice to build good bookkeeping habits, and reaching out to a trusted local CPA or bookkeeper for guidance or assistance, managing your companies finances can be a breeze.