5 Tips for Organizing Your Small Business Finances
Are you ready to take charge of your business finances? The first step is getting organized.
We’ve put together a list of five tips to help you start paving the path towards more profits.
1. Keep your Business and Personal Expenses Separate
It can be tempting to use your business credit card for personal expenses and vice versa, especially if you earn reward points for a specific card, but we have to recommend you steer clear of this. Mixing business and personal can lead to difficult budget balancing and a rough time for your accountant and tax advisor.
Not to mention if your credit card company determines that you’re using your personal card for business expenses they can usually raise your APR without much notice. Read the fine print on both of your card types before you make the decision to mix business and personal expenses.
2. Make an Appointment with a Tax Advisor
Meeting with a tax advisor at least once a year can save your small business lots of money. Tax professionals know the federal and local laws well, and can help you get the maximum number of deductions with no penalties.
Many tax advisors charge by the hour, so the cleaner your records are the less you will be charged. This is another great reason to keep your personal and business expenses separate!
3. Make a List of Financial Goals
Similar to financial planning for your personal accounts, the best way to get your business finances on track is to make a list of goals. Once you know what exactly you’re working towards, you can make small tweaks and large changes to reach those goals.
Perhaps you’ll see that investing in your liquor license can help you grow your profits long term, or that opening a second location is a priority for you within the next year.
4. Re-Evaluate Your Business Type
Did you originally register your small business as a sole proprietorship or partnership? If your business has grown significantly since then, you may want to incorporate or form an LLC.
By incorporating or forming an LLC you will protect yourself from financial risks taken on behalf of your business, and you may be entitled to many more tax benefits.
5. Talk to Your Employees About Expenses
If you feel like your company is spending more than it should be, it’s time to talk to your employees about expenses. Is there unnecessary waste in production? Could cheaper materials/products be obtained without sacrificing quality? Could old contracts be renegotiated for a lower cost? Is there any benefit to increasing bulk purchases?
As the business owner all final decisions are up to you, but there’s no reason to not enlist the help of your employees who may have special insight to their particular departments.
Would you like to explore financing options to grow your business? Contact us today to learn more about obtaining an FDIC-insured small business loan in just a matter of days!