Stay updated on all areas of tax filings and business processes affected by COVID-19Learn more
Top financing tips for your small business
One of the most challenging aspects of being a business owner is managing your finances. The following tips offer sound advice on this topic. For more customized guidance on financing for your business, contact our firm.
1. Establish financial goals: One of the most important things any business owner can do is establish financial goals and create a plan for achieving them—no matter the stage of business. This will help ensure you stay on track when it comes to your budget as well as help you achieve business goals.
2. Keep your eyes peeled on expenses: Successful business owners maintain a focus on expenses and keeping them down. Planning ahead is another cornerstone of managing your expenses, so you can avoid being caught off guard by rent, payroll, taxes, interest, cost materials for goods and products, debts, utilities, and other operating expenses.
3. Separate personal and business expenses: Personal and business bank accounts should always be kept separate—not only to make day-to-day financial management smoother but to also simplify year-end accounting. Also, avoid using business capital to float personal expenses or vice versa. The same holds true for loans and credit cards—keep them separate.
4. Review your retirement plan: When you are self-employed, it’s easy to keep the focus on present-day finances. However, it’s vital to plan for your future as well. Set up a formal retirement program and contribute to it regularly.
5. Monitor your money movements: No matter the size of your business, maintain a current view of where your money is and where it is going. If you outsource your financial management, be sure to take the time each month to review financial reports or monitor activity in real-time via your financial portal.
6. Create an emergency fund: Just like in your personal financial life, you should make sure you have an emergency fund for your business. Whether your business is seasonal or not, you should have enough money stashed away to cover six months of basic operational expenses if possible.
7. Prioritize debt reduction: A main contributor to small business failure is the inability to manage debt appropriately. Maintaining a healthy debt-to-asset ratio is essential. Also, make sure to consider the necessity of any additional debt before you take it on.
Running your own business is exciting, but it also requires maintaining a laser focus on finances. Start with these tips and give your finances the attention required—allowing you to make smart money management decisions over the long term.