There are several challenges when it comes to starting and maintaining a small business. Money management is at the top of the list of concerns for many small business owners. There are several things you can do to handle your operational processes. There are also daily things you can do to improve your business finances as well.
Separate Personal from Business Expenses
The first order of business is to never mix your personal with your business. That applies to your expenses as well as financing. While loan providers such as LendingClub.com will help to outline the distinctions, it’s ultimately the responsibility of the owner-borrower to understand how to manage business finances separate from personal. Accounting records, personal liability issues, and tax issues are just some of the other reasons not to mix them. You should also resist the urge to combine your business expenses with personal funds because it could lead to an even bigger mess later one.
The best way to separate personal and business finances begins with clearly defining your business budget and a personal budget. Follow each of these budgets so that the credit cards and loans reserved for your business don’t get used for your personal expenses and vice versa. Your accountant and bookkeeper will prevent you from combining your expenses when it comes to managing your books and paying your taxes.
Negotiate With Vendors Before Signing a Contract
You may have to do some research to find a bargain. When it comes to purchasing from a vendor or contracting with suppliers, always negotiate for a better deal. However, this doesn’t mean you should choose one based on the lowest price. Make sure you know what you’re getting before you sign the contract. Find out the purchase terms such as grace periods and late payment penalties when coming to a decision.
Pay All of Your Bills as Soon as Possible
Just like you should with your personal finances, you should pay your bills on a regular basis. Credit cards and loan payment late fees can leave you high and dry. However, paying late fees on your bills can also add up. Paying too late on your bills can also cost you money.
Make monthly arrangement so none of your bills fall through the cracks. The profit-loss margins are risky for young businesses. Preventing late fees can make a difference between ending the year in the black or in the red.
Make Budgeting a Regular Habit
You don’t have to be like the extreme couponers to save money on everyday expenses. But you should take advantage of deals and offers whenever you can. Fill out those mail-in rebate offers for office equipment, supplies. Or, you can get equipment and furniture second-hand or rent it. Not only does this make a positive impact on the environment, but it allows you to save money on utilities.
Spend Time on an Introductory Accounting Class
Just because you’re a small business owner doesn’t mean you’re suddenly going to be good with money. You’ll still accountable for business-related decisions. Even if you work with an accountant or bookkeeper, it’s important to know the basics of accounting. Taking an introductory course into accounting can help you learn about the cash flow of your small business.
The more you understand your business’s cash flow and finances, the more you’ll be prepared to make better business decisions. There’s nothing like getting hands-on when it comes to your money. Sometimes it’s better to do it yourself than to enlist the help of an accountant or bookkeeper.
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