From ensuring a solid return on your investment to protecting yourself from IRS audits, keeping atop of your company finances is an important part of running your business. Do you know the best ways to organize your business finances? It’s not as complicated as you think, especially if you know where to start.
Keep Business and Personal Finances Separate
The biggest thing you can do to organize your business finances is to keep your personal finances out of the equation. If you run a small business, you may feel it’s “easier” to use one bank account and just keep track of what you spend on business and what you spend on your personal needs. A shared account gets messy quick, though. You can make mistakes easily, and even if you’re diligent, it will be much harder to file taxes. Furthermore, should something happen that causes legal trouble for your company, your personal finances could be affected as well. Always keep separate bank accounts.
Apply for a Business Credit Card
If you don’t already have a credit card for your small business, you’re missing out on a valuable company resource.
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Business credit cards provide your company with financial flexibility that lets you make unexpected purchases as needed. Say you receive a large order that you were unprepared to fill. A credit card lets you purchase the inventory you need and pay for it later. Credit cards also provide a way for you to earn points, cash back, or other rewards for your spending. Use them for business travel, further monetary investment, or anything else that gives your company another leg up.
If you are just starting out and don’t have a high personal credit score, don’t worry. You can still get a company credit card. Simply look for options for a secured credit card instead. Secured cards rely on you to provide a deposit for the card. When you use the card in the future, the deposit is your credit limit. As you make payments, your credit limit rises. It also allows you to build your company’s credit score, which can help you get additional financing in the future.
Track Your Expenses With an All-in-One Organization Tool
Tracking your expenses and your sales is essential for ensuring your company finances remain organized. Running a business has many financial components, but using separate tracking tools for each one quickly becomes cumbersome. Experts recommend finding one application to track all aspects of your company’s financial dealings. All-in-one programs allow you to customize them to fit your needs, automatically does the math for you, and can even alert you if something seems askew, all of which minimizes the risk of financial errors. Cloud-based systems are becoming quite popular and some of them even provide automatic updates anytime laws change that could affect your bottom line. In addition to basic accounting records, your system should include information about your bank records, your business contracts, permits and licenses, trademark and patent applications, and employee information.
Audit Your Company Finances Regularly
Even when your financial tools do most of the work for you, you need to check in regular. Meeting at least once per quarter with anyone else who handles the company finances is essential. While automated processes cut down on the chance for human error, the chance is not zero. In addition, regular meetings allow you to see where your business is spending money without a proper return on the investment and lets you determine what changes you can make to create a more cost-efficient company. This could be anything from downsizing your office space to finding more affordable vendors.
As your company grows, you might consider hiring a finance expert to help you track and organize business expenses. A professional helps to ensure your company stays successful, as well as leaves your time free to focus on boosting employee morale, growing your client base, or simply taking some personal time for yourself.
