For most small business owners the financial management of your company is the spookiest part. How do we know this? Spooked small business owners are our clients!
Fear not; you can do it! Using the following list of tips, you can manage your own business's finances and stay in the clear. If for some reason, you find that you still need help, we are here for you! Just give us a call at 971-220-6416 and let us know how we can help.
Here are some of our best tips for keeping your books in order.
1. Keep your receipts
You can skate by without keeping receipts, right? Wrong! There is a ton of useful information on physical receipts that can't be tracked with your electronic bank records. Expense details are why you should keep all your receipts because all that information could be super-useful in the future.
But don't just save them! Organize them according to category.
When tax season rolls around, you will be so glad that you stayed on top of your purchases and receipts because it will highlight where you made and lost the most money over the year. That's the kind of information that you can use to make your business thrive year over year.
2. Make Profit and Loss Statements
The reason you will want to save and categorize those receipts is to create a profit and loss (P&L) report. A P&L summarizes the costs, expenses, and revenues that your business incurs. This is valuable information to help you understand where your money is going, prevent needless spending, and focus on what seems to be working for you financially.
Before creating the P&L statement, you will need to gather the following info:
Records for all purchases made with business credit cards
All sources of income to your business
All petty cash transactions and other activities with receipts
All info on returns and discounts that you offered your customers
For each item listed above, include the information for the total year as well as the quarterly amount. From there, you will need to create the P&L report.
3. Learn How to Invoice Properly
Invoicing seems simple to most, but sometimes the main thrust of the concept escapes people. Not only do they provide you and the client with a record of the transaction, but they also prompt the client to pay you. This can help you to keep track of clients who pay on time and those who owe you money for services rendered.
Never touch an invoice to edit it once it has been finalized, as this can confuse you, the client, and the accountants that you may employ.
4. Keep Accurate Records
It's so important for you to keep accurate records of all your finances that it can mean the difference between success and failure for your business. Most of your information is already tracked in your online bank accounts, but it's important for you to have all your financial information summarized and compiled in one program or location so you can have an accurate overview at any given time.
We have a few different software suites that we recommend you use for this kind of thing, so reach out to us at 971-220-6416 and let us know how we can help.
5. Collect Taxes at the Time of Sale
It's best to get this done at the time of sale so that it's never forgotten and to avoid a lump tax sum at the end of the year.
6. Open a Business Bank Account
Keep your business money and your personal finances separate! Open a new account in your business's name and you will be glad you did.
This makes tracking the flow of money much easier and when tax season rolls around, you won’t have such a headache as if you had left it in your personal account.
Get Receipts for Donations
If you donate to charity, make sure that you get a receipt for your contribution. You can receive tax benefits from all money and donations given to charitable organizations, but a receipt for those donations is required!
If you are stumped by anything in this article, or just need help with the heavy lifting Tenkey has your back! Just give us a call at 971-220-6416 and let us know how we can help.
