When you’re starting a small business, there are a lot of things to think about – from the initial planning stages to the day-to-day tasks of running your business. But one thing that’s often overlooked is the financial side of things.
That’s why we’ve put together this financial tips checklist for small business owners. This list will help you stay on top of your finances, and make sure your business is running as smoothly and efficiently as possible.
So, whether you’re just getting started or you’ve been in business for a while, make sure to read through these 10 financial tips for small businesses owners.
Know Your Business Entity Type
The first thing you need to do is figure out what kind of business entity you are. Are you a sole proprietor? An LLC? A corporation? The answer to this question will determine a lot of other things about your business, including your liability, tax obligations, and more.
If you’re not sure what kind of business entity you are, it’s a good idea to speak to an accountant or lawyer. They’ll be able to help you figure out what’s best for your business.
Get a Business Credit Card
A business credit card is a must for any small business owner. It’s a great way to stay organized and track your expenses. Plus, you can usually get a pretty good rewards program with a business credit card.
Some things to keep in mind when getting a business credit card:
– Make sure you’re using a business credit card for business expenses only. This will help you stay organized and keep track of your spending.
– Try to get a business credit card with a rewards program. This can help you save money on things like travel, office supplies, and more.
– Make sure you pay off your balance every month. This will help you avoid interest charges and keep your credit score healthy.
Understand Your Tax Obligations
You also need to make sure you understand your tax obligations. Depending on the structure of your business, you may be required to pay different taxes. For example, if you’re a sole proprietor, you’ll need to pay self-employment tax. If you have a partnership, you’ll need to pay partnership tax. And if you have a corporation, you’ll need to pay corporate tax.
The best way to make sure you’re paying the right taxes is to consult with a accountant or tax advisor. They can help you figure out which taxes you need to pay and how much you need to pay.
Implement Accounting Software
You can do all the bookkeeping in the world, but if you don’t have a system in place to keep track of your finances, it’s not going to do you any good. This is where accounting software comes in.
There are a ton of different accounting software programs out there, so it’s important to find one that fits your needs. If you’re a small business owner, you might want to look for something that’s specifically designed for small businesses.
Once you’ve found the right software, you need to get it set up and start using it. This can be a bit of a learning curve, but it’s worth it to have all your financial information in one place.
And once you’re up and running, you’ll be able to see exactly where your money is going and what areas you need to work on. Trust me, accounting software is a financial game-changer for small businesses.
Maintain Updated Financial Records
One of the most important things you can do for your small business is to keep updated financial records. This may seem like a no-brainer, but you’d be surprised at how many small business owners let their financial records fall by the wayside.
There are a few reasons why keeping updated financial records is so important:
– First, it gives you a clear picture of your business’s finances. This is critical for making sound decisions about where to allocate your resources.
– Second, it makes it easier to track your expenses and income. This information is crucial for tax purposes and can help you keep tabs on your cash flow.
– Finally, updated financial records provide peace of mind. Knowing that your records are up-to-date will help you sleep better at night and feel confident in your business’s future.
So how do you go about maintaining updated financial records? The first step is to set up a system that works for you. This might mean using accounting software, hiring an accountant, or simply setting up a spreadsheet. Whatever system you choose, make sure that it’s one that you’re comfortable with and that you’ll actually use.
Prepare for Unexpected Expenses
Another thing to keep in mind is that you should always have some money set aside for unexpected expenses. Things like repairs, replacements, and even legal fees can pop up when you least expect them, and it’s important to be prepared.
One way to do this is to create a “rainy day fund” that you can dip into when needed. This can help you avoid going into debt or having to take out a loan, which can put your business in a tough spot.
Another option is to get business insurance. This can help cover the cost of unexpected repairs or replacements, and it’s something that every small business owner should consider.
Invest in Your Business
You need to reinvest in your business regularly if you want it to grow—and that means setting aside money each month to plow back into the company.
Think of it as planting seeds: The more you invest, the more your business will grow. And just like with planting seeds, you need to be patient. It can take months or even years for your investment to pay off, but it will be worth it in the long run.
There are a few different ways you can reinvest in your business:
– You can use the money to buy new equipment or machinery.
– You can use it to hire new employees or train existing ones.
– You can use it to open a new location.
– You can use it to launch a new product or service.
Whatever you do, make sure you’re reinvesting in your business on a regular basis. It’s one of the best things you can do to ensure its long-term success.
Choose the Right Insurance Policies
Now that you have a solid financial foundation, it’s time to make sure your business is properly insured. This will protect you from any legal or financial problems that might come up down the road.
The first step is to figure out what kind of insurance your business needs. This will vary depending on the industry you’re in, the size of your company, and your location. But some common types of insurance for small businesses include:
– Property insurance: This covers damage to your business property, like your office or store.
– liability insurance: This covers any injuries or damage that your customers sustain while on your property.
– workers’ compensation: This covers any injuries or illnesses that your employees sustain while working for you.
– product liability: This covers any injuries or damage that customers sustain from using your products.
Once you know what types of insurance you need, you can start shopping around for the right policies. Make sure to get quotes from several different insurers so you can compare prices and coverage.
Review Your Finances Regularly
This might seem like a no-brainer, but you’d be surprised how many small business owners don’t review their finances on a regular basis. I’m not just talking about your bank account balance—although that’s important, too.
You also need to keep an eye on your income and expenses, cash flow, and profitability. This can help you spot any potential problems early on so you can take corrective action.
Ideally, you should review your finances at least once a month. But if that’s not possible, aim for once every quarter. And if you have any major changes—such as a big purchase or hiring new staff—take a look at your numbers right away to see how it affects your bottom line.
Seek Professional Advice
You might be thinking, “I’m a small business owner, not a financial advisor. I don’t need to seek professional help.” But if you’re not comfortable handling your company’s finances, it might be time to reach out to a professional.
A good place to start is with a certified public accountant (CPA). They can help you with everything from filing your taxes to setting up a retirement plan.
Another option is to work with a financial planner. They can help you figure out how to reach your long-term financial goals.
There are a lot of different options out there, so take some time to research what would work best for you and your business. The most important thing is that you feel comfortable with the person you’re working with.
Congratulations on taking the first step towards financial success for your small business! Here are 10 easy tips to get you started:
1. Keep track of your expenses and know where your money is going.
2. Make a budget and stick to it.
3. Get organized – set up a system that works for you and helps you keep track of your finances.
4. Stay on top of your invoices and make sure you’re getting paid on time.
5. Have an emergency fund to cover unexpected expenses.
6. Invest in yourself – get a good accountant or bookkeeper to help you out.
7. Get professional advice when you need it – don’t be afraid to ask for help from experts.
8. Make a plan – know what your short-term and long-term financial goals are, and work towards them.
9. Be patient – Rome wasn’t built in a day, and neither is financial success. It takes time and effort to get where you want to be, but it’s worth it in the end.
10. Enjoy the journey – remember, this is YOUR business, so make sure you’re doing what YOU love every day!