By Emily Long
Spring is the perfect season for planting a few seeds in your small business. If your finances could use a little organization, there’s never been a better time to give your business a thorough refresh. Managing and organizing your finances now will help you orient yourself toward this year’s goals and meet the 2018 tax season with confidence.
Tidying Up Your Small Business Finances
If it’s been a while since you’ve been through your business’s finances, you could be setting yourself up for a major headache down the road. Taking the time to organize before an audit or financial emergency will make your business much more resilient. A financial spring cleaning will also help you spot potential issues early on, helping you streamline your daily operations and set yourself up for success.
1. Set and Revisit Long-Term Goals
When operating a small business, it’s easy to get caught up in day-to-day stresses and lose sight of your long-term goals and aspirations. The first step in your business spring cleaning should be to revisit the direction you want your business to grow in.
The SMART goal-setting process can help you plan your next steps. SMART stands for specific, measurable, attainable, relevant, and time based. Goals that fit the SMART process are clearly articulated (specific), adhere to targets and milestones (measurable), are practical and realistic (attainable), are well suited to your business model (relevant), and stick to a definite timeline (time based).
2. Separate Your Personal and Business Accounts
If your small business’s finances tie to your personal accounts, separating them will greatly simplify your tax filings. Separate accounts help you keep track of cash flow and reduce the temptation to use your personal savings account to bolster your business operations.
Setting up a business account legitimizes your business and opens doors for tax write-offs and more precise management of your expenses. You’ll need to file with the IRS for a Federal Employer Identification Number and ensure that your business name isn’t trademarked. Taking these steps will put you in the perfect position for growth since you can clearly articulate your business finances to investors.
3. Master Your Finances
Many small businesses neglect to use technology to help manage their finances. Using an accounting software like Quickbooks Self-Employed can help you track expenses and receipts in real time, saving you hours of work for your next tax filing. Software tools also demystify your business expenses so you can set priorities and goals in those critical first years.
As your business grows, consider switching to a more robust accounting package or hire an accountant or tax specialist to help manage your finances. These steps can provide more comprehensive financial reporting data, helping you make better business decisions both long and short term. Making an error in your taxes can cost much more than hiring a tax specialist.
4. Clean Up Your Digital Footprint
Your social media footprint could be holding your business back if it doesn’t appeal to your target markets. Spring is the perfect time to get back in and rewrite the copy on your website, Facebook page, and other social media accounts.
Cleaning up your email inbox can have equally tangible benefits for your customer engagement and your workflow. Organizing your communications strategy helps achieve your customer engagement goals, lower your response times to critical issues, and ensure you never miss an important email.
5. Upgrade Your Business-Management Toolbox
Keeping up with the latest tools can feel daunting, but your business can stagnate if you’re not able to leverage new technologies. Upgrading to cloud-based business management tools for payables and receivables saves time, decreases overhead, and allows greater insight into your operations.
Addressing the technological limits of your business will also put you in a better position to expand. Roughly 27% of businesses are unhappy with their internet providers, which can slow your daily operations to a crawl. Consider upgrading your internet and equipment now before they becomes a liability.
6. Address Your Employment Classifications
Does your business have the right balance of employees and independent contractors to achieve positive growth? Many businesses accumulate inefficiency in hiring and contracting since your business plan can pivot year to year. Take a hard look at the individuals on your payroll, and consider whether it’s time for a transition or a new hire.
For tax season, third-party contractors can be a major source for errors and IRS involvement. Take the time to double-check your contracts and determine whether any of your relationships have changed since the contracts were written. This is also a good opportunity to check reimbursements and wages paid.
Following these tips can prepare your business for your next quarterly or yearly tax filing, but these habits work best if they become part of your businesses’ daily operations. Keeping your finances organized helps your business grow strategically over time, allowing you to reach your long-term goals.
Emily Long is a freelance writer based in Salt Lake City, Utah. She writes about tech, home automation, and finance with the occasional dive into health and wellness. When she’s not living out of a suitcase, you can find her practicing yoga, running Utah’s best trails, or attempting to perfect her coffee brewing skills. Follow her on Twitter at @emilyanndc.