10 Essential Finance Tips For Small Businesses
Did you know that only 33% of small businesses stay in business for 10 years? One of the main reasons why businesses fail is due to finances. Are you confident managing your small business finances?
Having a solid understanding of finance will ensure that your business grows, stays in compliance, and doesn’t go out of business. If you know that you have more to learn about business finances, keep reading for 10 finance tips for small businesses!
Create a Budget
One of the most important things that you can do as a small business owner is creating a budget and sticking to it. If you don’t make a budget, you could find yourself overspending, and your business could fall into debt.
Not only will a budget prevent you from going into debt, but it will also allow you to create a clear growth plan. Having a budget will allow you to allocate money where your business needs it the most.
Separate Business and Personal Finances
When you first start a small business, it can be tempting to combine both your business and personal finances. This is especially true if you are the only person running the business.
It may seem simpler to keep your finances together, but you should separate them. When it comes time to pay taxes, having your finances separated will make your life a lot easier.
If you don’t separate your finances, you could be held liable for any debt that comes from your business. While it is scary to think about it, you also could be personally responsible if your business were to be sued.
Saving money for your small business is important because you never know when you will encounter unexpected expenses. If you put some money into savings each month, you will have a buffer in case of an emergency.
What happens if your website crashes next month and you lose all sales? Having savings will allow you to get the website back up and running quickly, and the lack of sales won’t be detrimental.
Avoid Using Paper
While the old standard in business was having hundreds of filing cabinets to store papers, that is no longer the case. Not only is going paperless better for the environment, but it also will help you stay organized. No one has time to sort through finance papers!
By using online accounting software, you can keep all your invoices, receipts, bookkeeping, and reports in one spot. Check out these reasons why your small business needs bookkeeping service.
Automate Your Bills
Did you know that you can automate the bills for your business so that you don’t have to remember to pay them? Remembering to pay all the bills on time is a time-consuming task.
If you want to save time and worry less about paying bills on time, automate them. Just be sure that there is always enough money in your business bank account to pay them. The last thing you want is overdraft fees.
Have a Good Credit Score
Another finance tip for small business owners is to maintain a good credit score. Banks and investors look at credit scores to determine the creditworthiness of your business. Having a good credit score helps you get credit cards, loans, and investors.
If you plan on growing your business, the odds are good that you will need an investor at some point. Investors are more likely to get involved in your business if you can show that you are reliable and trustworthy.
Use Financial Forecasts
While creating a budget can help you stay on track for the short term, how do you set financial goals? How do you know when you reach those goals? One of the best ways is to use financial forecasts.
Financial forecasts will allow you to create models of how you expect your business to grow. You should aim to create a business plan each year with financial goals and expectations. Don’t forget to include market trends.
Protect Against Fraud
Experiencing fraud as a small business owner can be a frightening experience. While going paperless is the best move for your business, you will need to pay attention to security when paying bills online. Be sure to use both anti-virus software and firewalls.
In addition to people stealing your business’s information, they also could steal your personal information. That is just another reason why it is important to separate your personal and business finances.
Save for Retirement
While it may be tempting to invest all your money into your business, you should make saving for retirement a priority. Try to save at least 15% of your paycheck for your retirement account. Your future self will thank you!
If you aren’t comfortable managing your business finances, one of the best things you can do is seek help. There are plenty of advisors, accountants, and bookkeepers to help you keep your finances in good shape.
Seeking help will allow you to worry less, save you time, help you stay in compliance with the law, and give you someone to talk to about your finances.
Are You Ready To Try These Finance Tips?
Managing your small business finances is critical to the success of your business. Keeping track of your finances allows you to avoid debt, keep a good credit score, and focus on growing your business.
Did you enjoy reading this article on the best finance tips? If so, check out our other articles in the business category for more advice on growing your small business!