In order to establish a business and stay in business, you must manage money efficiently and accurately. Whether you do all the work yourself or hire a professional, there are some steps that must be taken to get started. It is also necessary to stay on top of the money management for your business once you have established a system of record keeping for your business.
Establishing a Money Management System
Gather your financial records. This includes sales records, payroll, payment receipts, bank records and tax records--anything pertaining to the financial aspect of your business. Sort the records in chronological order and categorize them in groups that make sense for your business. You will need to put your records in order before you can develop an effective financial management system.
Choose software for accounting or maintaining financial records and install it on your computer (see Resources). Even if you decide to hire a financial adviser, it will make it much easier for her to advise you if your records are well organized . If you decide to maintain your own financial records, choose the best software you can afford and learn to use it like an expert.
Enter the data from your financial records onto your computer and save it in the appropriate format to present to your legal adviser or accountant, either as a hard copy or as computer files. If you are managing your own financial affairs, devoting time to this step will save hours and many headaches down the road. This step will also make it much easier to add records for future transactions.
Decide whether you will maintain your own financial records or hire a financial adviser. For very simple businesses, it may be possible to manage your own finances. However, if a business has several employees, multiple income sources or other complicated financial elements, it makes sense to hire an accountant, an attorney who specializes in financial advising or both.
Choose your financial adviser(s). Get recommendations from friends or business associates if possible. Otherwise, consult with your local bar association and the American Institute of Certified Public Accountants (see Resources).
Schedule an initial appointment with your financial adviser, during which you will discuss your business in detail and present your financial records. You will also discuss the strategy for filing your tax returns and other financial documents. If you are maintaining your own financial records, mark due dates for quarterly returns and other deadlines on a calendar or appointment book.
Maintaining Financial Records
Set aside time at the end of each day and a longer period once each week for record maintenance. This will prevent the situation of having assorted records on scraps of paper scattered throughout your office or home. Even if you are using a financial adviser, your records should be presented in an organized manner.
Consult with your financial adviser once per quarter if she doesn't initiate contact. Update any changes in your records and discuss any special circumstances. If you are managing your own finances, go over your books thoroughly once each quarter in order to record any significant changes.
Set a date well in advance of April 15 to submit your final annual tax records to your financial adviser. If you are maintaining your own financial records, set aside a time well in advance of April 15 to calculate your taxes. This way, if it turns out that you need help with a particular question, you will have sufficient time to do so.
Do not put off organizing your financial records until the last minute before taxes are due. Do not expect a commercial tax preparation service to handle all your financial record keeping needs
- Do not put off organizing your financial records until the last minute before taxes are due.
- Do not expect a commercial tax preparation service to handle all your financial record keeping needs
Chris Blank is an independent writer and research consultant with more than 20 years' experience. Blank specializes in social policy analysis, current events, popular culture and travel. His work has appeared both online and in print publications. He holds a Master of Arts in sociology and a Juris Doctor.