If you’re a small business owner, you know that managing your finances is crucial to keeping your business afloat. But it can be a daunting task, especially if you’re not used to handling money matters.
Below, debt experts Creditfix have shared their top 15 tips for managing your business finances. As one of the UK’s most established debt help providers, Creditifx have helped thousands out of debt through the latest solutions and expert advice on business debt, IVA plans and how to check if you have a CCJ.
Never fear! We’ve put together a list of 15 top tips for managing your small business finances, so you can keep your head above water – and maybe even save some money in the process. Check them out below.
1. Make a budget and stick to it
Creating and following a budget is one of the most important things you can do when it comes to managing your small business finances. When you have a budget in place, you know exactly how much money you have to work with each month and can make better financial decisions.
2. Keep track of your expenses
It’s important to keep track of your business expenses so you can see where your money is going. This will help you make changes to your spending if necessary and will also be helpful come tax time.
3. Stay organized
Being organized with your finances is key to keeping on top of things. Keep all of your financial documents in one place and set up a system that works for you. This could include using accounting software or simply using a notebook to track your income and expenses.
4. Understand your cash flow
Your business’s cash flow is the money coming in and going out of your business each month. It’s important to understand your cash flow so you can make sure you have enough money to cover your expenses.
5. Know when to outsource
There are some financial tasks that you may not be able to handle on your own, such as bookkeeping or preparing tax returns. In these cases, it’s important to outsource to a professional.
6. Invest in your business
It’s important to reinvest any profits back into your business in order to help it grow. This could include things like buying new equipment or hiring more staff.
7. Keep an eye on your credit score
Your credit score is important as it can affect your ability to borrow money for your business. Make sure you keep an eye on your score and work to improve it if necessary.
8. Have a rainy day fund
It’s always a good idea to have some money saved up in case of unexpected expenses. This could be your “rainy day fund” which you can use to cover things like unexpected repairs or a slowdown in business.
9. Don’t go into debt
One of the worst things you can do for your small business is to go into debt. Try to avoid taking out loans or using your credit card for business expenses.
10. Get help from a financial advisor
If you’re feeling overwhelmed by your finances, it may be a good idea to get help from a financial advisor. They can help you make a budget, understand your cash flow, and make other important financial decisions.
11. Keep personal and business finances separate
It’s important to keep your personal and business finances separate in order to avoid any confusion or mix-ups. This means having two separate bank accounts and credit cards for your business.
12. Know your tax obligations
As a small business owner, you are responsible for paying taxes on your income. Make sure you understand your tax obligations and set aside money each month to cover them.
13. Use online banking to save time
Online banking can save you a lot of time when it comes to managing your finances. You can easily transfer money between accounts, pay bills, and keep track of your transactions.
14. Use accounting software
If you want to save even more time, consider using accounting software to help manage your finances. This can automate many tasks such as invoicing and tracking expenses.
15. Hire a bookkeeper
Another option for saving time is to hire a bookkeeper to help manage your finances. This person can handle tasks such as tracking expenses and preparing financial reports.
Managing your small business finances can be a daunting task, but if you follow these tips you’ll be well on your way to keeping your books in order. Make sure to create and stick to a budget, track your expenses from day one, understand your cash flow, reinvest back into your business, and know when it’s time to outsource certain functions. These principles will help keep you financially organized and allow you to focus on what really matters – running and growing your small business.