One of the biggest challenges of being a small business owner is keeping the financial side of the house organized. It’s not uncommon to see stacks of invoices and piles of receipts on an entrepreneur’s desk. The thought of bringing your desk into order can seem like an impossible challenge or an effort in frustration as piles emerge as quickly as things get filed.
Yet keeping the finances in order is one of the most important things that should be done to keep the business running successfully. We know that piles of papers may never fully disappear from your future. But in the meantime, here are 5 simple things you – as a small business owner – can do to help keep your finances in order.
1. Keep your home and business finances separate. Even if the only employee is you, it’s important to have an accurate record of how your business is doing besides just paying your monthly bills. Pay yourself from your business only after the expenses are paid.
2. Invest in financial software. Besides being a great tax write-off, financial software is the easiest way to keep an accurate record. There are great options available, with one of the easiest being QuickBooks Pro. It allows you to produce invoices, sales receipts, customer accounts, and at the end of the year, it makes tax time a breeze. The software has additional upgrades as you grow, and you can use the program as little or as much as you need.
3. Consult a CPA. Schedule a one-time meeting with a certified public accountant that specializes in small businesses. They can advise you on the best way to set up your finances that will help your profitability and avoid any end of the year surprises. Many offer services that will assist you in setting up your financial software and will teach you how to use the different features.
4. Keep all of your paperwork in one place. Unless you have a scanning system, papers will always pile up. There are many methods to filing, but none of them work if your paperwork piles up in different locations. Depending on the size of your business, invest in a divided file folder or a filing cabinet. Start with big files by type (receipts, invoices, communication, etc.) and continue to divide as needed.
For example, start with a single file for “Receipts.” As time goes on, you might find yourself looking up receipts for a small group of companies repeatedly. Create a file for each of those companies and leave the rest in the general file.
5. Review your finances weekly. Once you have your finances set up and in one place, you can quickly review your numbers on a weekly basis. This allows you to easily adjust to changing sales cycles and prepare for future expenses. You will also catch anything that needs attention before it becomes an urgent issue.
Getting a handle on how to organize your financial business will free you up to do the things you love and probably the reason you went into business for yourself in the beginning. Most importantly, by organizing your finances you are actually improving your products and growing your sales.
Image Source: Nils Geylen