Today, I'm sharing four financial tips for small businesses. Some of these might seem like a no-brainer, but I feel sometimes it is a good idea to return to the basics.
1. When you start your business, set up a separate business checking and savings account. You may be tempted to run your business out of your personal bank account - either because of ease of use or not being sure if your business will succeed. By having a separate business account, you'll be able to easily track expenses, payments and have better reporting that will give a better snapshot of your business, at all times.
2. Pay your taxes on time -- this includes sales and use tax, payroll tax and business income taxes. Make a plan on how you will ensure you can pay these taxes on time, also. You don't want to suffer the anxiety of getting to tax time and not being able to afford to make the payment. Some clients decide to put a certain percentage of their business income into a savings account each month to make certain they have money on hand to pay taxes.
3. Create a budget for your business. Seems daunting, but a budget will provide a guideline for expected income and expenses and give you a way to track your actual numbers with estimated financial goals. Put pen to paper (or cursor to Excel spreadsheet) and list all of your expected income and expenses, including general operating expenses. It's best to review this budget monthly or quarterly and compare your real results to the budget and keep your business on track.
4. Understand the seasonality of your business and how it affects cash flow. For example, if you have a business in the wedding industry, you might see a fall off in revenue during the months of December until March. Being aware of this pending slow period, you can maintain a cash cushion going into the slow season and ensure that general operating expenses, and your paycheck, will be covered throughout the lean months.
Hope these tips will help you as you continue on your journey as a small business entrepreneur. And, just because we love to giveaways, click here for a dowloadable document with all of this information.