In many ways, self-employment as a small business owner is the dream. You control your own schedule and choose your income, with nearly limitless financial potential. It’s the nitty-gritty details of starting a business that scare away most people though.
Among the scariest of those details are finances. Managing a business’s finances is very different from personal finance, and you’re doing both at the same time. Where do you start in establishing and managing the company’s accounts? Try these tips on for size.
Maintain Separation Between Bank Accounts
Treat the company like your child who just turned 18 and get them set up to self-sustain. Setting up a business bank account and business credit card are the first steps.
This makes financial reporting more straightforward because everything coming through that account is for the company. You don’t have to go through a list of personal financial transactions each quarter,pick out any business expenses.
Choose One or More Payment System(s)
You have a place to put your money, now figure out how to get paid. There are plenty of payment processing tools today like Stripe, Square, and PayPal.
Look for tools that integrate well with your bank accounts. Review their reporting features too because this helps you track income and stay on top of everything.
Use One Singular Invoicing System
When businesses or freelancers start out, they tend to create manual invoices for each client. Not only does that take time but it means you must manually track which invoices are and aren’t paid to maintain cash flow control.
With a growing business, you need better tools. Try an invoicing system that sends each invoice as well as tracks which ones are paid. Choose one that includes links to your payment processing options too so clients can click, pay, and move on.
This saves you time every month. It also gives you more accurate views of all accounts receivable. You can send email reminders to clients with overdue invoices as well, making the collections process easier and less stressful.
Consider Hiring an Accountant
It might seem like a big expense to hire an accountant for your small business, but for many freelancers or entrepreneurs, it’s worth every penny. You’ll save hours of time when someone else can manage your accounting. Plus, you’ll have the peace of mind that it’s getting done right.
There are many types of accountants depending on what you need. Small business accounting specialists typically handle day-to-day bookkeeping as well as tax returns and other tax necessities. If you don’t need tax preparation and only want a bookkeeper, freelance bookkeepers could be terrific options.
Establish Tracking Systems with Clear Goals
Especially when your business is starting out, you should watch your financials like a hawk. Keep watch over all financial statements, income and expenses, business revenue, and more.
Develop or choose a tracking system to keep everything in one place. Some types of accounting software can link with your bank accounts and credit cards so it tracks the data for you. Don’t forget other types of accounts like business financing loans.
You don’t just need a tracking system, though, you need to use it too. Create an appointment in your task scheduler to go over the numbers every week or month, checking up on business expenses, cash flow, and other details, ensuring your business plan is going off without a hitch.
Understand Your Tax Needs
Taxes will stress any of us, especially small business owners because there are more types of taxes involved. Beyond income tax, the business might need to pay sales tax depending on the product or service, import tax, payroll tax...the list goes on.
Meet with an accountant to discuss the details based on your business model. They can arrange a way to track, file, and pay all taxes as needed. It helps to have separate bank accounts where you store anticipated taxes gradually rather than panicking over huge bills every quarter.
Keeping Small Business Accounts in Order
Personal finances alone are challenging but business finances are a whole different ball game. Having a plan with software tools along with knowledgeable professionals will make all the difference in your short-term stress not to mention your long-term success. Start with the tips above, building up your accounts as you go.