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It isn’t all fun and games when you start your own business. It’s going to take a lot of long hours and hard work to make it a success. If you want to increase your chances of success, you need to get your financials in order.
With 82% of small businesses failing because of poor cash flow management, you can’t afford to get your business finances wrong. Follow the nine business finance tips below to make sure all your money is going to the right places.
1. Keep Personal and Business Separate
It can be tempting to handle everything with your personal bank account after getting your business started. But this is a mistake you need to avoid.
When you mingle your personal and business finances, it can be hard to separate things during tax time. You need to prove that your business expenses aren’t personal purchases to the IRS. You’ll save yourself time in the future by creating a separate bank account from the start.
2. Automate Your Bills
You have enough work ahead of you running your business. The last thing you need is to keep track of when all your bills are due. Make sure you automate as many of your bill payments as possible.
When you set up automatic payments on your bills, you can free up time and mental space to focus on the parts of your business that move the needle forward. You’ll only need to spend a few minutes every month examining your cash flow to make sure everything is in order.
3. Pick the Right Invoicing Technology
You need to accept payments in any kind of business your in. The question is, what is going to work best for you?
If you do client work, you may have customers who want to pay by check, credit card, or bank transfers. You need to consider the fees involved for each of these methods and consider which expenses you’re willing to take on.
If you run a consumer business, customers are more likely to pay by cash and credit. On top of that, you’ll need to get a POS system to take payments if you run a physical store.
Make sure whatever option you pick can track incoming money, so you know how much you’re bringing in and expecting to receive in the future.
4. Avoid Expensive Debt
It’s hard to ignore a credit card when they provide a quick way to pay for things you can’t afford. The problem is, you can end up paying more in interest in the long run.
Before you purchase anything with credit, decide if it’s worth paying the interest from your credit card. If the purchase isn’t required immediately, consider applying for a small business loan with a lower interest rate.
Getting the right financing can save you from paying a lot in interest.
5. Follow Up Old Invoices
In a perfect world, businesses would pay their invoices when they get them. Unfortunately, that isn’t always the case.
Make sure you regularly audit every outstanding invoice you have. You want to watch for invoices that are getting close to their due date. If you have an overdue invoice, don’t hesitate to contact the other business to ask for a status update.
Sometimes businesses have trouble paying their bills. Other times, they just forget. Make sure you remind your customers about their bills, so they always remember to pay.
6. Build an Emergency Fund
A business bank account is no different than your personal one. It always pays to have reserve money in case you need it.
It may be even more necessary in a business. You have employees that rely on your business for their living expenses. If you run into issues and don’t have any cash reserves, you may not have enough cash to pay your staff.
Always set aside money every month for situations like this. Business is more unpredictable than you think.
7. Get the Right Software
You’re doing things the hard way if you track all your expenses by hand. There’s technology available that can handle most of the hard work for you.
Look online at the accounting programs available for you. All you need to do is connect them to your bank account. They will import all your transactions for you and categorize everything.
If you’re looking for a reliable program, look into QuickBooks Enterprise. It has all the features any business will need.
8. Avoid Small Purchases
It’s easy to do your due diligence on purchases when they cost a lot of money. You don’t want to spend more than necessary in these cases. It’s much easier to go out of control when making smaller purchases.
A few dollars now and again doesn’t seem like a big deal. But if you do it a lot, it can add up to a significant monthly expense. Make sure you track every small purchase your business makes so you don’t buy more than necessary.
9. Get Help From an Accountant
Business financing sounds simple to a lot of people. All you need to do is keep track of incoming and outgoing money. There isn’t much more to it, right?
Financing for business is more complicated than that. There is a lot more to keep track of if you have employees, and you need to keep better track of things for taxes.
If you want to make sure you aren’t making mistakes, don’t underestimate the benefit of hiring a business finance expert. They can look through your books to find errors and show you ways you can save money.
Don’t Ignore Your Business Finances
Your business finances are one thing you can’t get wrong. If you go into a decision with the incorrect information, then you could end up putting yourself into debt or out of business. Make sure to use the tips above to keep your finances in working order.
If you’re looking for more advice and keeping your business running smoothly, head back to our blog. Our latest posts will help you learn everything else you need to know.