Staying on top of your business finances is an important aspect of maintaining positive cash flow and financial stability. If you’re lost when it comes to proper accounting and business funds or resource management, you might find yourself unable to invest in or grow your business.
Keep your business running smoothly while also planning for your future with these tips for managing your business finances.
Prioritize business financial planning
Don’t hold off on analyzing accounting reports and financial statements to gain insight into your business’s performance. Staying on top of accounting and bookkeeping will allow you to set the right financial goals, whether that’s to invest more money in your business (for expansion, staff, or new inventory) or save for retirement.
Preparing ahead of time is also the best way to avoid tax season stress. Avoid common tax mistakes with organized records and bookkeeping. In addition to understanding tax deductions (many of the expenses you incur in the course of running a business are tax deductible), learn how you can lower your tax burden as a small business owner. For tax advice on your unique business needs, consult a reputable accountant.
Manage cash flow
Ensuring the financial health of your business requires managing your cash flow efficiently.
Take a close look at all of your business expenses (direct and indirect) and overhead costs (fixed, variable, and semi-variable) to calculate your overhead rate, and monitor it on a regular basis. Review your business reports, and assess your core business and financial operations in relation to your sales and operating margins.
Once you have a handle on costs and margins, you can leverage a variety of financial services and tools to manage your business funds and cash flow with business banking. Evaluate your purchase, liability, credit, and interest needs when considering using a business debit or credit card.
Obtaining financing is another tool to help your business grow. A business line of credit or business credit card can be a good option for short-term financing. For funding larger projects or business needs — like a renovation, equipment, or new marketing campaign — a business loan might be the way to go.