15 tips for managing your business finances

Restored from the Empower Network archive (2011–2017), lightly edited to meet our current advertising standards. Views are the original author’s.

With so many people starting home businesses, myself included, remembering to address your finances is super important. I had to share this amazing post by David, an accountant. He takes finances and makes organizing them easy. Please like and share if you find this post as useful as I did.

As a business owner you probably have learned that accounting and managing your finances is not the most enjoyable part of running a business. This is generally one of those back office tasks that haven’t been made a priority when running a business. Managing your business finances can be both time consuming and stressful, below I have listed a number of useful tips that will work wonders for your business.

1) Consolidate any outstanding balances

If you have numerous credit card accounts with balances outstanding, arrange to consolidate them into one single debt. Take care with any transfer fees, also if you have other accounts such as IRA’S, savings or mutual funds, you should consider combining these too. Keeping your money in one place will make your life a lot easier.

Analyze and monitor any credit card statements

Analyze how much interest you are paying on your credit card statements and be wary of any increases. If your interest rates rise, or you get charged transaction fees, query it with your credit card company. If necessary, consider switching to another company for a better rate.

Get protection for overdrafts

Many banks offer a service, where if you are in danger of your cheque bouncing, money can be taken from another location, for example, a savings account or a credit card. This can be arranged with your bank for a small nominal fee.

Write down your financial goals each month

Take 1 hour every month to organize your business finances and set your business realistic financial goals.  Doing this each month will give you a clearer view of where your business is financially, and help you make more informed decisions and keep everything ready for tax time.

Call a professional to help with your taxes

Try to schedule an appointment with an accountant or tax advisor, you’ll receive guidance on what your business should be doing with its finances, and advance on how to avoid making mistakes during the year that can’t be corrected at a later date.

Plan to pay your bills on schedule

Try to set up a set schedule to pay your bills at set dates each month. Doing this will save you time and help make your business more organized, rather than just paying your bills as and when you receive them.

Re-evaluate your business entity

Most small businesses start out as a single partnership or proprietorship, and then change to another legal formation as they grow. You may want to consider forming an LLC to keep your business protected from some financial risks and save on taxes.

Find a trusted mentor

With so many government schemes these days, access to free help is just a phone call away, with many websites that connect business owners with experienced entrepreneurs that fit their needs. If the mentor is trustworthy, then having him or her assist you with setting up finances can be invaluable.

Make use of automatic payments

The majority of banks offer automatic payment services to your creditors. Many creditors will even give reductions if customers sign up for these. Keep a track of your payments and record any deductions. This can potentially save you both time and effort.

Separate personal and business finances

If you haven’t already done this, take the required steps to separate your expenses and personal finances from those of your business. Your personal and business accounts should be kept completely separate; this will help you to avoid any long term financial complications.

Keep all of your bills in one place

Whether it’s a special draw, or a folder, you should keep all of your bills in the same place. It can be very time consuming to look for misplaced bills, and time is money! Set up a suitable solution bearing in mind the amount of bills you are likely to receive.

Go digital with your Checkbook

There are numerous computer programs that can help you to keep a track of your business finances. These will make your reconciliations and payments a lot easier.  There are also computer cheques that can be ordered and will fit the majority of printers. Your software should also be able to record all of your transactions. A lot of banks will have links to the software so withdrawals and deposits are taken care of. Using digital software will also help you to organize your taxes easier.

Cancel any unused accounts

If you have any bank or credit card accounts that you are not using, be sure to cancel them. This will help lower your credit score. Avoid being lured into opening new bank or credit accounts, by discounted prices and low interest rates.

Put money aside

You should consider setting up monthly deductions from your bank accounts that automatically go into a savings fund. Avoid using this money, and over time you will generate a substantial amount of money.

Organize your files

Every 6 months, go through your files and dispose of any old bills and receipts that you no longer need to keep. Check with your IRS office to find out exactly how long you should keep them.

This is a guest post by David at Graham Paul Chartered Accountants

PS. If you want some bonus tax secrets from our amazing team’s tax proffessional click the link below.