The most basic approach to sorting out your finances as a small business owner is simply to stop procrastinating and do it
By Laura Martins
While it can be rewarding and exciting, there are many different challenges that come with running a small business. One of those challenges for many people is learning how to navigate the financial side of things. For many people this can be a seemingly overwhelming task, however if approached in the right way, it can make a big difference to the livelihood of your company.
Here are five financial hacks for your small business:
The most basic approach to sorting out your finances as a small business owner is simply to stop procrastinating and do it. If you aren’t financially-minded, or if you’re stressed about finances, it might be tempting to put off your bookkeeping or invoicing responsibilities. However, if you put off your accounting, any problems you might be facing are likely to just get bigger and more serious.
To help ensure no major financial crises unfold, the best attitude that you can apply to the finances of your business may be to just do it and deal with each speedbump as you get to it! Being prepared and using different tools is one way to make business finances seem more manageable and less overwhelming. Whatever technique works for you, ensure that you are not letting your piles of paperwork grow and grow until it’s too late.
One thing that put people off from doing finances is that the tasks involved can be slow, boring and repetitive. Rather than manually entering your accounting data, set up software and systems that can eliminate some of these small tasks and make these processes easier and less time-consuming. For example, you can invest in software that syncs with your bank account and keeps track of important financial data. This also reduces the chances of errors and typos being made when the tasks are being done by a human.
By digitising these processes, you can save yourself a lot of paperwork and guarantee that your financial information is accessible when you need it, rather than having to sift through piles of paper to find what you need.
As a small business owner, finances may not be your forte. However, as little as you may care about invoices, taxes and paying bills, they are important parts of being a successful business owner. To help ensure the success of your company, it is important to have at least a basic understanding of accounting and finances so that you can ascertain for yourself how your business is progressing.
Even if you hire professionals or work with an accountant, it is still vital that you understand the jargon they will be relaying to you. You can take an introductory course on accounting or simply do some online research. The better you understand your business finances and cash flow, the better decisions you will be able to make when it comes to money management.
Separate business and personal expenses
Being a small business owner or freelancer, it can be difficult to separate your business and personal life, especially given the fact you may work crazy hours or work from home. However, it is still important to separate your business and personal finances when managing your business.
Mixing your personal and business accounts can lead to tax issues and messy accounting records. One of the best ways to prevent this from happening is to have a clear separation between these domains when it comes to finances. This means having separate business and personal accounts, separate credit cards, and keeping receipts separate. Set a personal budget and a business budget and try to stick to them strictly.
Using a credit card smartly
How you use your credit card impacts the financial success of your business and can make a big difference to how easy or difficult it is to do your finances. When used carefully, credit cards can be useful tools for your business and a means of potentially saving money.
By doing your research and learning about the rewards available to you through certain spending habits, you can find hacks when it comes to spending less and saving more. One of the best things to do is to make sure that the credit card you’re using is right for your type of small business. You can do this by using a financial comparison website to search for cards that suit your needs, whether you need a low-interest rate or are looking to avoid annual fees.
Smart use of a credit card can also be important for a business in terms of building up good credit. With good credit comes many benefits, for example being rewarded for responsible spending in the form of points, cashback or airline miles that can be useful if you travel a lot for business. It also helps if you ever want to take out a loan or expand the business as your company grows.
Laura Martins is a content manager for RateCity, where you can make smarter financial decisions and compare thousands of financial options.