Proper management of your small-business finances is one of the most important and often most overlooked responsibilities of building a successful business. Keeping the necessary records can seem tedious, but the time spent now will pay off when you need to know if your business is generating enough income to sustain itself and provide for growth. While each small business is unique, following a few simple steps can set the foundation to keep you informed and your business healthy.
Start Out Strong
The first step to setting up or gaining control of your small business finances is to search out a qualified CPA. Look for a CPA or CPA firm that concentrates in working with other small businesses. Inc.com notes that finding the right accountant can help a business with not only tax returns, but with longer term tax planning, business planning, networking, and even personal tax planning if your still the major stakeholder in your business. Many times you can run across a qualified firm just by asking your friends, neighbors or other small-business owners. Don't be afraid to interview two or three to find the CPA that you feel most comfortable with and who understands your specific business needs.
Keep careful records. As you manage your business, you are looking ahead to growth while ensuring the daily operations run smoothly. Accurate records let you see where you are as well as whether you have the resources to grow where and when you want. Recording all income that flows into your business and saving all receipts or bills for what you spend makes it easier when it comes time to file required taxes and information required by the government, your backers or stakeholders.
Organize Your Information
Unless you outsource your accounting function to your CPA or an outside bookkeeper, the next step will be purchasing a small business accounting software package. There are a variety of software packages that are designed to handle a variety of business types.
Manage Your Information
Designate yourself or another person to be in charge of managing your financial data entry. If done daily, the data entry function will take very little time and will allow you or your designee to handle other duties within your business. Keep track of all income and expenses that relate to running your business from incoming sales revenue to your office supplies expense. If you or an outside source such as your lender requires an annual review of your financial records by a CPA, you can lessen the expense of this review by having up to date records in your accounting system.
You can hire someone with financial expertise to set up your financial system as well as manage your financial activity. Be sure to communicate with him often and schedule regular meetings to go over the results of your efforts. Don't be afraid to ask questions as this let you more effectively manage your small business finances.
- Keep track of tax deadlines and make sure to file on time to keep up good business credit and avoid late fees.
Based in Cary, N.C., Greg Hrabec has worked in finance and small-business operations since 1989. He has also written for "Boom" magazine. Hrabec earned his M.B.A. in finance from Strayer University and his Bachelor of Science in finance from Ferris State University.