As a business owner, you often wear plenty of different hats. It is not uncommon to consistently put out the hottest fire on any given day of work. The problem is that the maintenance of your finances can often suffer as a result.
Make Sure You Budget Time for Finances
It is easy to push maintaining your books to the back burner. You may always think there is something more important to do, like maintaining your net promoter score or devising a new promotional strategy.
The problem with this philosophy is that issues can quickly mount when finances get neglected. Maintaining accurate records can be difficult when trying to remember why you incurred a specific expense three weeks ago.
As your budget this time for maintaining your finances, do your best to have this time occur during non-business hours. Many business owners can get easily distracted by other items when their business is open and running. Set aside time each week to make maintaining your books and records your only focus.
Consider Accounting Software
An excellent way for a business owner to maintain their finances is by utilizing one of the many accounting software programs on the market. One of the advantages of using software such as this is that the software does so much of the work for you.
For example, if you do your own payroll, the software can do quite a bit of the heavy lifting. You put in items like employee hours worked, and then the software will take care of calculating payroll tax.
Before you start shopping for a piece of software, it is vital to know what you expect this software to do. Ask yourself questions like what type of reporting you need, if you send invoices, or if you have inventory to manage. Once you understand what you need from accounting software, it will be easier to find one that suits your needs.
Create a Good Filing System
Doing the work of maintaining your books is only half of the battle. You also need a system to maintain all of the information behind the numbers in your books. A good rule of thumb is that anything that would generate a piece of paper should get saved somehow.
These items can be anything from invoices that you send, invoices that you receive, paystubs, and auto financing quotes, to name a few. Traditionally all of these items would reside in a fireproof file cabinet. That way, they remain relatively safe and are easily accessed by a business owner.
A more modern version of this is to keep electronic copies of all of these documents in a digital filing system. When you use a digital system, you can access these records whenever you have access to the internet. It also keeps them safe from potential calamities like fire or flood.
It is vital that you do good research on any digital storage system. You want to make sure that it is reliable, easily accessed, and continuously backed up.
Remember that these records are a crucial part of managing your finances. If you ever have to validate or verify the numbers in your books, such as to the IRS, you will need this documentation.
Do Not Forget To Save for Taxes
Turning a profit can be the greatest thrill that any business owner has. One crucial thing to remember is that you will generally have to pay tax on that profit.
Do not fall into the trap of spending your profits and then having nothing left to pay tax at the end of the year. Set aside some of your earnings in a dedicated bank account so you have the money to pay your taxes when they come due.
Keeping up with your business finances is not a complicated process. Come up with a good plan and stick with it regularly to keep your books and records up-to-date.
