As a team of veteran accountants, we have seen many small businesses succeed and thrive, but we’ve also seen many struggle due to poor financial management. As a new small business owner, it’s important to establish good financial habits from the start to ensure long-term success. Today, we are going to share some of our top tips to get you started.
Tip #1 – Separate business and personal finances:
We will say this again for the ones in the back and scream it from the rooftops. Separate business and personal finances. If this is the one tip you walk away with, it will be a great start. Mixing business and personal finances can create a mess and make it difficult to track your expenses. To avoid confusion and potential legal and audit issues, it is important to keep your business finances separate from your personal finances. This means opening a separate bank account and credit card specifically for your business. If your personal funds are supporting your business in the beginning, that’s okay, Make sure to transfer those funds into the business bank account and use that business account for all business related expenses.
Tip #2 – Keep track of all your expenses:
One of the most important things you can do as a small business owner is to keep track of all of your expenses. This includes everything from office supplies to rent and utilities. It’s crucial to have a clear understanding of where your money is going so you can make informed decisions about your spending. This also means keeping copies of your receipts. Set up a filing system early and stick to using it. It will save you a lot of headache down the road. If you use accounting software, as mentioned in tip # 3, you can typically snap a picture of your receipt right in an app for that software. Easy peasy!
Tip #3 – Use accounting software:
Investing in accounting software can save you time and money in the long run. There are many out there but our top recommendation is QuickBooks Online or Wave Accounting. Software can help you keep track of your finances, generate reports, and streamline your bookkeeping processes.
Tip #4 – Stay on top of invoicing and accounts receivable:
Invoicing and accounts receivable are critical components of managing cash flow. Make sure you invoice promptly and stay on top of accounts receivable to ensure that you get paid on time. Cash flow is super important to any business and ensuring revenue is coming in should be top priority.
Tip #5 – Don’t neglect taxes:
Taxes can be a headache for small business owners, but they can’t be ignored. Make sure you understand your tax obligations and deadlines and keep accurate records to make tax time as stress-free as possible.
By following these tips and working with a qualified bookkeeping team like Vegter Financial, you can set your business up for success and achieve your financial goals. Remember, good financial habits start from day one!
Have questions or want to make sure you are setting yourself up for success? Schedule your free consultation today!