By Natalie Jones, HomeOwnerBliss.info
Money management 101 will help you stay on top of your company’s finances.
Many challenges come with running a business, but money management is perhaps one of the most significant. According to an Intuit study, about one-third of small business owners struggle to keep up with cash flow and pay their bills. So, if you’re having financial management issues, know that you’re not alone!
However, it’s essential to address your problems so you can position your company on firm ground and grow as you envision. If you’re overwhelmed with the responsibilities of managing your business finances, consider these practical tips from The Un-Retired Entrepreneur.
Money Management 101 — Use Software Including Invoice Makers and Accounting Tools
Bookkeeping is complicated and requires a lot of time, and even the essential tasks of paying bills and tracking revenue can be complex. So, when it comes to determining whether your business is profitable, the reasons why it is or isn’t good, whether you need to invest in new equipment, or how to make financial projections, you might need help at some point! There are many tools on the market to help you better grasp your finances.
In this regard, using an online invoice maker makes a huge difference. Generating and managing invoices is critical to the success of your business, ensuring that you’re more likely to get paid on time to keep the cash flow coming. This is especially important when you’re first starting out. Using an invoice maker allows you to use your logo, chosen graphics, and customized icons on your invoices to create professional-looking documents that your vendors and clients see every time they receive an invoice, which also helps with your branding efforts.
Also take time to research the various accounting software to help your small business stay on solid footing. Brands like QuickBooks, FreshBooks, and Xero produce some of the most popular software products available.
Incorporate Your Business
Another practical way to make your finances more manageable is by incorporating your business. You can receive liability protection, tax benefits, and flexibility, among other perks by forming an LLC.
However, regulations for establishing an LLC differ by state, so you will want to learn the rules before starting an LLC. Rather than do all the work yourself, consider having a formation service to set up your LLC, which will guarantee that all the filing requirements are met.
Revisit Your Budget
Every company must have a budget it can uphold to succeed in the long term. Bench notes that a solid budget will outline the costs of operating your company and show you how much you can spend. Take time to create a small business budget that enables you to establish expense and revenue goals.
In turn, this can make it easier to manage your money. Furthermore, you can project the revenue you will receive in the future and plan solutions for the times your payment is lower than you expected, such as boosting income and cutting expenses.
Separate Business and Personal
If you want to maintain organized records, you must keep your business and personal funds separated. Otherwise, you will be vulnerable to missed opportunities and overspending.
What’s more, you can use business bank statements to monitor spending, go over your books, and track profitability. And you want to fight the temptation to pull from your funds to cover business expenses or vice versa.
Keep Up With Your Accounts Receivable
If you ever sell products or services on a credit basis to customers, you must keep track of your accounts receivable. Find ways to incentivize early payment, send out payment reminders before the due date, and give late notices to customers.
Remember that accounts receivable show up as revenue in your books. And if customers fail to pay or chronically pay late, it can severely damage your company’s finances.
Money Management 101 — Conclusion
You will only get so far without effectively managing your business finances. Remember to find accounting software that will automate much of your bookkeeping responsibilities, and consider forming an LLC.
Also, create a realistic budget that you can modify when necessary, keep your business and personal funds separate and keep on top of your accounts receivable. You can lay a firm foundation for a flourishing business by following these essential tips, but stay open-minded to other tactics that can help along the way!
Image via Unsplash
By Natalie Jones, By Natalie Jones, HomeOwnerBliss.info
The Un-Retired Entrepreneur encourages everyone to live their dreams and enjoy their ideal retirement lifestyle. Reach out today for more info!