Mastering Your Small Business Finances

From DIY Bookkeeping Tips to Professional Insights

Disclaimer: The information provided in this blog post is for informational purposes only and should not be construed as professional financial advice. Please consult with a qualified professional for personalized financial guidance. Additionally, this blog post may contain affiliate links, meaning I may receive compensation if you purchase a product or service through a link. Please rest assured that I only recommend products I use or have thoroughly researched.

Do you manage a small company? Do you need to outsource your bookkeeping work to a knowledgeable professional? If so, Empowered Bookkeeping and Tax Services, Inc. is here for you!

If you are not ready to hire someone else to handle your books? No issue. Here is some advice to get you moving in the right direction for effective DIY money management. Maintaining and expanding your business depends on your ability to manage your funds. In addition to being a best practice, properly documenting and substantiating all transactions to and from your business is an essential step to avoid future hassles, including but not limited to legal and tax issues.

Organize Your Financial Records

Start with the end in mind. All relevant paperwork must be preserved safely, including bills, receipts, bank statements, and other documents. Properly classifying and organizing these resources can save time and avoid future hassles. Consider using digital tools like accounting software or cloud storage to keep everything in one location. Retain all documents related to the formal establishment of your business as well. The legal structure you choose will have a variety of effects on how your company will be taxed. Consult a tax, accounting, or legal expert to ensure you understand your legal structure's tax implications and can operate your business.

Choose the Right Accounting Software

Let me start by stating that Excel and Google Sheets are fantastic for numerical tabulation! They are not, however, the finest options for keeping track of your business transactions. For small business owners, there are numerous reasonable or even free accounting software options. QuickBooks, FreshBooks, and Wave are a few standard options. You can use these tools to keep track of your earnings and outlays, create financial reports, and, if necessary, manage payroll.

Educate Yourself

Don't approach the assignment carelessly. Bookkeeping can be as easy or complex as you want it to be. It doesn't have to be a pain in your you-know-what if you build up effective methods and procedures. On the other hand, if you approach it with the attitude of "I'll get to it when I get to it," it will inevitably bite you in the same you-know-what. Give yourself a boost by getting acquainted with some fundamental accounting concepts. Online classes, tutorials, and resources are offered for free or at a cheap fee. If you understand the essentials, you'll be more equipped to run your business's finances.

Set a Budget

Use a roadmap to save yourself from unwelcome surprises. Outline your anticipated income and expenses by creating a budget. Monitor your budget and make modifications as needed to keep on course and plan for the future. When making estimates, especially for revenue projections, be conservative and realistic.

Monitor Your Cash Flow

Although you cannot foretell the future, it need not come as a complete surprise to you. You can estimate when you could encounter cash surpluses or deficits by knowing when cash will come into your business and when it will need to leave. Regularly review your cash flow statement to monitor your inflows and outflows. As needed, make sure to update the cash flow statement.

Separate Business and Personal Expenses

This action is essential. Open separate banking accounts for your company to keep a clear division between your personal and corporate finances. This will not only make tracking your earnings and expenses simple, but it will ensure that you remain in tax compliance.

Automate where possible

Much of the available accounting software comes loaded with the automation abilities to integrate with your banks and other apps to be able to pull in data with ease. Make the most of your accounting software by ensuring that you set up automatic bill payments, invoicing, and expense tracking. Automating routine processes will save you time and reduce the likelihood of errors. Additionally, give yourself a helping hand by integrating platforms that work with your accounting software to save you time.

Reconcile regularly

It is essential to ensure that your transactions from your accounting software when compared to your bank and credit card statements, agree. Reconcile your transactions regularly to assist in spotting and resolving errors and discrepancies early on.

Seek professional advice where necessary

Even if you are not ready to hire a professional bookkeeper, there are times when it is a good idea to consult a professional. A professional accountant or tax expert can be a great resource when managing complex tax requirements and ensuring your financial records are precise and compliant.

Financial management isn’t the most exciting task in running your small business; however, it is essential to your success. The actions you take now will affect you in the future, whether you choose to hire experts to help or go it alone. Remember that creating a budget, choosing the right accounting software, and preparing your financial statements are just the beginning. A company's overall success is grounded in consistent efforts to manage your finances effectively. The steps you take today to manage your business finances well, will pay off far into your future!

More Resources

Check out my storefront for discounts on accounting software that I have used, along with a listing of Pros and Cons for each!