Starting a business and then facing the obstacles by yourself is a big deal in itself. One of the biggest obstacle every entrepreneur’s face is organizing business finances. You want your finances to be properly organized and if it is not then you have to face chaos. Organized and up-to-date business finances can contribute to the success of your business and make sure you are hitting your profit goals.
Here are five simple ways to organize your business finances:
1. Set an easy filling system
Wondering how to organize your small business filing system? Whether you choose to go with a paper or digital filing system, here are some of the items you should keep:
- Accounting and bookkeeping records
- Bank statements
- Contracts
- Permits & licenses
- Employee / Outsourcing records
- Vendor records
- Tax papers
If you choose to keep paper records, then consider buying a filing cabinet or pretty file box.
2. Separate your Business & Personal Finances
Mixing your personal and business funds in your business account can jeopardize the legal protection your business structure offers. While paying your tax it gets more complicated when you don’t use separate accounts. And using personal accounts for your business can definitely make it more difficult to get financing as many lenders want to verify business revenues.
As soon as your business starts making money, keep a separate bank account and don’t let it get mixed. You shouldn’t have any business transactions flowing through your personal accounts and vice versa.
3. Schedule Your Expenses
Planning your expense helps you in controlling the cash inflow and outflow of your business. Every business owner has important expenses that must be paid in order to keep the business running. You can track your expenses just like you do your incomes. If you don’t schedule your expenses on time you may run out money.
4. Protect Your Finances
All business needs its own level of protection, but you may want to consider getting some insurance or establishing an LLC or an S-Corp. Establishing an LLC or S-Corp allows you to separate your business identity and finances from your personal finances.
For example, if you ever had to undergo any legal issues, your personal property and assets would not be liable to incur any debt.
5. Use an accounting program
Keeping everything in a spreadsheet might get messy. There are a lot of free and low-cost accounting programs available which will save you from headaches along the road. Tally.ERP 9, QuickBooks India, Zoho Books, MargERP 9+ and Vyapar are a few examples of the best software for a small business owner.
Before you decide on an accounting program, think about the needs of your business. Few things to consider include:
- Do you need to send invoices?
- What level of income & expense tracking do you need? How granular do you want to get?
- What kind of financial reports are available?
- Do you have clients that you need to track? What about vendors?
- Do you have employees? Is payroll processing supported?
- Do you need mobile access? What about multiple users?
- Can your credit card processing be integrated?
- What about integrating 3rd-party e-commerce platforms?
- Do you have inventory to manage?
- Does it interface with your bank?
- Does it provide enough bells and whistles or too many? What is the learning curve?