9 Tips for Simplifying Your Small Business Finances
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If you're like most small business owners, you're always looking for ways to simplify your finances. In addition to running the day-to-day operations of their businesses, you also have to worry about things like marketing, HR, and, of course, finances. Financial management is crucial for any business, but it can be a lot to handle if you're not used to it. This guide will provide you with some tips on how to simplify your small business finances so you can keep growing your business!
What are Small Business Finances?
At a high level, your small business finances include these activities:
- Financial planning
These topics can be complex and time-consuming once you start to unpack them, but they are important to the success of a business. Having proper systems in place for your small business finances can help you to track your progress, make informed decisions about where to allocate resources, and keep your business solvent.
Without any strategy or planning for your small business finances, it can be easy to fall into debt or miss opportunities for growth. If you are starting a small business or if you are already running one, it helps to understand the basics of business finance and keep it simple so you don't feel overwhelmed. Check out our 9 tips for simplifying your small business finances below!
9 Tips for Simplifying Your Small Business Finances
It's important to evaluate the processes you use to track your small business finances regularly. Organizing your records can save you hours of work down the road and also help you avoid penalties for missing payments or filing deadlines. In addition, keeping your finances in order will give you a clear picture of your business's financial health, making it easier to make sound decisions about growth and investment. So don't wait until tax time to get your financial house in order - taking small steps regularly will pay off in the long run.
1. Keep Track of Your Income and Expenses
This may seem like a no-brainer, but keeping track of your income and expenses is important. Knowing where your money is coming from and where it's going will better understand your financial situation and help you make more informed decisions about your spending. There are several ways to do this, but using a simple spreadsheet or accounting software like QuickBooks or Freshbooks can make the task much easier.
2. Keep Good Records
It is also important to keep good records of your small business finances. This means keeping receipts for all of your income and expenses, as well as any other financial documents that may be relevant. Keeping good records will help you stay organized and make filing your taxes a breeze each year.
3. Make Use of Technology
There are many technological tools that can help you to simplify your small business finances. For example, the accounting software programs mentioned above, Quickbooks and Freshbooks, can automate bookkeeping tasks, making it easier for you to keep track of your finances, helping with the first two tips we listed above. Additionally, some mobile apps allow you to take pictures of your receipts and documents to easily upload for your record keeping.
4. Create a Budget
A budget is a tool that can help you track your income and expenses and ensure you're not spending more than you're bringing in. Creating a budget can be as simple or as complicated as you want it to be, but there are a few key components that all budgets should include:
- Income sources
- Fixed expenses (like rent or mortgage payments)
- Variable expenses (like utilities)
- And savings/debt repayment
Once you have all of this information laid out, you can start to see where you may need to cut back on your spending or make adjustments to your budget.
5. Stay Organized
This one goes hand-in-hand with keeping track of your income and expenses. Staying organized will make it easier to find the information you need when you need it and help you avoid any stressful surprises down the road. There are many ways to do this, but using folders or labels can help keep everything sorted if your business relies on physical receipts and paperwork. However, we recommend you get as much of your business as you can set up online so that you can access your information anytime, anywhere, and not spend your time tracing paper trails.
6. Make a Plan for Unexpected Expenses
No matter how well you plan, there will always be unexpected costs that come up from time to time. Whether it's an unplanned repair or an emergency purchase, having a plan for these types of expenditures will help ensure that they don't put a dent in your budget or throw off your financial plans. One way to do this is to create a "rainy day fund" by setting aside money each month in case of unexpected costs. You may also want to consider getting insurance for things like liability or property damage so that you're protected financially in the event that something does happen.
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7 . Set Realistic Goals
When it comes to small business finances, it's important to set realistic goals so that you don't get discouraged along the way. If saving money is one of your goals, start small by setting aside a reasonable amount for your business, even if that is $10 - $20 per week, instead of trying to save a larger amount all at once.
8. Keep Your Personal and Business Finances Separate
We've said it before, and we will say it again, separating your business and personal finances is crucial to the long-term success of your business. It will make tracking your business expenses easier and protect your personal assets if your business experiences financial difficulties. First Internet Bank can help you get started for free if you need a business bank account.
9. Know What You Can Deduct
As a small business owner, there are a number of things that you can deduct from your taxes. These include business expenses such as advertising, office supplies, and travel. Keeping track of these deductions as they incur will help you to save money come tax time.
Related Reading: Do I Need an Accountant for my Small Business?
Simplify Your Business Finances Today!
Managing your small business finances doesn’t have to be complicated. In fact, following these simple tips can help you simplify the process and take some stress out of the equation. So, what are you waiting for? Start simplifying your finances today so you can focus on growing your small business. Browse our Growth Partners for additional savings if you're just getting started!