Small businesses don’t tend to have a very high rate of survival, with a large proportion failing because of poor financial health. Unfortunately, hard work and commitment won’t help if you don’t have an efficient financial system in place. Let’s look at five basic small business finance guidelines that you should aim to follow closely.
You want to ensure that you carefully monitor all the incomings and outgoings of your business. Even if some expenses seem small and insignificant, they can easily add up over time. It may be a worthwhile investment to employ a dedicated financial professional who is experienced in handling these matters. This person can make appropriate suggestions for the successful running of your business and eliminate unnecessary stress.
The last thing that you want to do is get into the habit of buying unnecessary things that don’t improve your business in any way. You can avoid this by monitoring everything. This will help you to make sure that you are not ordering too much of a particular item. Record details such as purchase dates, purchase price, selling price and selling date. Manage your inventory efficiently and you will help to free up cash for your day-to-day transactions.
Separate Your Accounts
If you are planning on only using a single account for your personal and business transactions, now is the time to reconsider. You are much better off separating your accounts so things don’t get overly confusing. It is likely that you will need a credit card account at some point, so it may be worthwhile to look into the best small business credit card before choosing one. If you pay for anything in cash, you should record these transactions carefully to give yourself the clearest picture of your business accounts.
Get Your Taxes Right
While it may not be the most pleasurable experience in the world to pay your taxes, it’s something that you must do. You don’t want to get yourself in trouble with the federal government as this can result in unnecessary expenses for your company. Again, this is where a qualified financial professional can help tremendously.
Receivables and Payables
Finally, you should keep a close eye on what you owe vendors and what your clients owe you at all times. If you have clients who are consistently not paying on time, you should have an efficient invoice-chasing system. Ideally, you will want to get your clients on a direct debit system so you know when you will get paid every month.
These five basic guidelines can give you a good starting point for keeping a closer eye on your small business finances.