Understanding the Financial Side of Your Business
How to Run Your Business by the Numbers

As you develop and launch your small business, it’s easy to think about the fun stuff – like product development, communication, sales, and marketing, but what about your finances? Not something to ignore, proper financial maintenance and oversight can truly make or break your business.

Here are a few tips to help you start with a solid foundation ensuring your business has strong financials and stable business plan to boot.

Keep your business and personal accounts separate. 

This is the most effective way to make sure you are in the good graces of the IRS (Internal Revenue Service). Even if you’re the only employee, taking measures to separate your personal and professional finances, like opening a business bank account, applying for a credit card, etc. will help protect your personal assets. Also, make sure that all documents related to your business include your company name and are signed on behalf of the organization, not you personally.

If you haven’t already, make sure you’ve already registered your business. (Link to that blog on the website)

Accurate bookkeeping is a must.

Bookkeeping is a big part of managing your resources accurately. Keeping good records of operations will help you keep track of cash flow and profitability. This helps you forecast correctly and prepare for the future of your business.

Bookkeeping is a big topic. On a basic level, it involves tracking the following (this is not a complete list).

  • Revenues and expenditures
  • A balance sheet, or snapshot of your business’s financial standing at a given moment
  • Employees and payroll
  • Cash flow
  • Accounts receivable and payable
  • Maintaining all records of inventory

Cloud-based bookkeeping software is your best bet.

Managing all the items listed above can be overwhelming! Luckily, there are many helpful accounting software options that will automate many aspects of day to day financial management. These applications are also cloud-based, meaning your accounting documents are always accessible, no matter where you are, or what computer you are working from.

Check out the following software options below to see if one is right for you. You can also attend our QuickBooks classes – visit our event calendar to see when our next class is.

QuickBooks Online

Freshbooks

Xero

Don’t procrastinate financial upkeep.

Set aside 30-60 minutes every week to keep up with your accounting responsibilities. Like many things, if the time isn’t scheduled in advance, it may not happen at all, creating a massive headache down the road.

There certainly comes a point when managing the financial integrity of your business becomes too much. In that case, it may be in your best interest to hire an accountant to take over bookkeeping completely. Regardless, it’s a good idea to hire a professional accountant to review your books at least once a year. They can also help with tax filing and provide insight when you’re making any major financial decisions.

GROW can help too!

Part of our role in the West Michigan community is providing entrepreneurs just like you with the financial tools to build a successful business. We offer a three-part Small Business Growth and Planning Series designed to provide you with the information and resources you need to formulate or refine your business plan and position your business for long-term success.

As part of this series, there are multiple thematic clusters, one of which is titled, “Financial Awareness Cluster” and focuses on:

  • Financial strategies for your personal and business finances
  • Financial reporting and analysis
  • Navigating business banking

If you’re interested in this series, or any other class we offer at GROW, please review our events calendar and get registered today.

 

 

Sources:
https://smallbiztrends.com/2016/01/small-business-finance-basics.html 
https://www.p2bi.com/p2binvestor-blog/ten-financial-management-tips-for-business-owners/