15 Financial Management Tips for Beginners
Separate Business Expenses from Personal – This will help keep your personal spending separate from your business costs. Plus, having a business credit card could come with a higher credit line, for unforeseen expenses. Not separating the two can cause confusion when you’re analyzing your yearly spending. It could even potentially get you in tax or legal trouble.
Get A System That Works – Getting your finances in order is just as important as any commitment you make. Organizing your financial paperwork, such as bank statements, insurance and mortgage payments and financial debts – this will help reduce the confusion. Create a monthly budget and payment system that will allow you to easily obtain the important document for payment, filing, and inquiry.
Don’t Think Too Small – Sure, you may not have many expenses to manage, but that doesn’t mean you should settle for an Excel spreadsheet. During tax season, sending over a spreadsheet, bank statements and loads of receipts is going to make your accountant’s job just that much tougher. Having a software program where you can easily input expenses, will not only keep track of expenses and deductions – but can help make your business more profitable today and forecast your financial future.
Connecting All the Dots – When you connect your bank accounts and credit cards to an accounting software program, you can reconcile and download statements as needed. Even easier than that Excel spreadsheet!
Save Time (and Money!) – Having your expenses automatically inputted into a program will not you save time on data entry, but you’ll be ready for tax time!
Pay Yourself First. Always – Try putting away a percentage of your earning away in an account and budget a reasonable amount to live on. You should make sure that your business is serving you! Read more about “paying yourself first” in the book, “Profit First” by Mike Michalowicz. http://profitfirstbook.com
Save For a Rainy Day – It’s important to make sure you have an emergency fund for whatever comes your way. Whether you put away $25, $50 or even $100 a month aside, it’s imperative to keep money on-hand for unforeseen expenses – like taxes.
Keep Up with Your Finances – Make sure you set time aside each week to tackle financial tasks. Weekly tasks could include checking your cash position, record transactions or review your projected cash flow, and following up on late payments from clients. Depending on your volume, you may need more or less.
Get Appropriate Help – If you’re (realistically) never going to keep up with QuickBooks, hire a bookkeeper. If you need help on your budgeting, managing your cash flow, or growing your bottom line, feel free to give me a call to see if we’re a fit.
Make Sure Your Profiting – On each sale you make, you should be making a profit. It may not be huge, but it should be something. Otherwise, you’re working AND losing money – and who wants to do that?!
No Profit? Why Not? – If you’re not making a profit on every sale, this needs addressing. Ask yourself if it’s due to specific clients, specific products or services that are the most troublesome? Or have there been random things that have gone wrong that have been corrected. This is not unusual for a new business. Just make sure you’re not repeating the same mistakes. You already paid for that lesson!
Have a Plan to Grow! – I’m not talking about a giant binder that sits on a shelf gathering dust. Have some ideas mapped and start trying them. Make sure you try them one at a time – It’s never going to get easier.
Know Your Financial Responsibilities – Do you know your Sales Tax, Payroll Tax, Quarterly Taxes, State Filing or Specific Licenses in your field? Not knowing is not a valid defense and could be very costly later on.
Checklist! – I’m a big checklist person. Create a checklist so you know what you should be doing weekly, monthly, quarterly, and annually. Make it a recurring task in your task management system of choice. If you want mine, click HERE. Try the downloadable app “Wunderlist” on your computer or phone.
Look at The Big Picture – Allocate some time for thinking. Allow yourself to spend some time either weekly, monthly or yearly to reflect on how things are going. Figure out the best time of day that you’re most creative, and generate new ideas and goals.
Enjoyed this blog? Contact me for more information about your business’s financial future at firstname.lastname@example.org.