Organizing Your Business Finances
If you are the owner of a small business, organizing your business finance is extremely important. Without a well-thought out system you will not be as effective at operating day-to-day and you may run into trouble when you must report your earnings at tax time. Here are five tips to keeping your books straight, even if you are not a natural organizer.
A Business by Any Other Name
This point may seem obvious, but you need to make sure that your business, no matter how small, has an actual name. A name gives it legitimacy, and will help you stay better organized. It doesn’t have to be catchy, you just need a title to put on tax forms and other documents related to business finance.
Don’t Mix Business With Pleasure
Be certain that money associated with your business is strictly designated as such. Set up separate checking and savings accounts in the name of your business and apply for a credit card for making purchases. Never use your personal accounts for purchases related to your company, and never use your company’s accounts for purchases of personal items.
You Need a System
You need some kind of system for keeping written records of your business finance transactions. If you are still a small operation then an inexpensive software product or even a simple spreadsheet may suffice. Free or low-cost computer classes are available at many public libraries and community colleges if you do not know how to operate these tools. What matters most is that you are consistent about recording numbers and that your data are easily accessible.
Consider a CPA
If you have been doing business for some time and have large numbers to crunch have many clients, then you might consider hiring a certified public accountant (CPA) to keep your books for you. CPAs do not work for free, however, so be certain that you can afford to pay one before going this route.
Taxes Old and New
Don’t wait until April to think about your taxes. Now is the time to take a look at last year’s income tax return and consider its financial implications for this year. You should already have a plan in mind for how much you will owe, what deductions you will claim and how you are going to pay. If you feel overwhelmed, then consider talking to a CPA at least for one session to obtain advice.
Organizing your business finance is something every business owner must do. By using the above tips as a guide you will be on your way to a more efficiently run company.