Starting up a small business is in itself a big deal. Before starting a business, every entrepreneur needs to perform several tasks and formalities. The success of the small business majorly depends on how you organize the finances of the small business.
Every small business, when just started is running out of funds and capital. They requires to make proper plans before investing in any kind of expenses. The expenses and proper financial management in small business contributes major role in the success of the business.
When the business is performing well but the finances are not properly organized and expenses over the total profit, the business will go in loss and might shut down in its starting period. Thus the business owners of starts ups and small business require spending more time on organizing their business finances.
Here in this guide, we are going to present you six crucial steps that a small business should perform in order to organize their finances well. The steps listed below will help the start up business and small businesses to soon hit their goals and achieve the top in the market.
Key points to organize small business finances
Following are some key points to organize the finances of small business:
Track your income
Though in the starting of the business, there is low income, still the owners needs to track their income from the small business and start up as well. You should be aware of how much you are making from your new business. It is suggested to track the income from the small business every month, week, and even daily tracking is income is also recommended. The regular tracking of income will help the business owner to understand where the money in their business is coming from.
There are several applications available in the Google play store and the App store or any other third party app store that allows you to track your income and help you understand the major source of the income in your small company.
Another benefit of regular tracking the business is that it helps you monitor all the financial related activities of the business easily. When you keep tracking your income on regular basis, you will soon get alarm in the case when any kind of fluctuation, even minor one, happens in your company.
For those who are targeting to achieve a specific income goal, they should start tracking their business from now only.
Track and audit the expenses
Along with tracking the income, tracking of expenses in the business is also very important. Every businesses are having both incoming and outgoing. So the small business owner should be aware of the expenses made in their company.
Company need to invest in several assets and inventory in order to keep the business running. These all costs some expenses. So the small business owner and start ups owners who are already running out of funds should monitor their expenses on regular basis as well.
Expenses lowers the profit and reduces the money that hits your pockets. So keep an eye on all the expenses taking place in your company. You should know that what money your company is making how much part of it is required to invest in the company for purchasing inventory, stock, or any other expenses.
Tracking the expenses will help you know the balance of incoming and outgoing of money in your business. In the case when the expenses is more than the income, it will alarm you to control the expenses and make proper planning before investing in anything.
Like you track your income, you can take help from the same applications to track your expenses as well. This will help you have control on your expenses and make sure that you are not overspending.
Separate your personal and business bank account
When the business is small, many business men make mistake of keeping the personal as well as the business bank account same and then regret later. Every business owner should own their different bank account for the business and separate bank account for the personal use.
This will help the owner to organize the business related finances easily. Having same bank account for personal as well as business use will confuse you during the tax payment time and will take your countless hours in reorganizing the business finances.
Avoid all the headaches of reorganizing the business finances, keep it organized in a separate bank account specially for the business.
Secure your business
When there is a business, there will be risk. So in order to keep your business protected from all the risks, it is advised always keep your business insured. Also, the insurance will help your business to have a separate business identity and keep your personal finances separated from the organizational finances.
When the business is insured, in the case of any of the legal issue in business, it will never impact on your personal assets. So it is always recommended to insure your business and protect your business as well as your personal assets from any kind of liability.
Consider the method to receive payment
In order to make the payment receiving method smooth, you should be determined for the payment receiving method. For example, when you are selling products, you should accept credit card payment at your location or in the case when you are providing online home delivery or any other service, online payment method should be added for receiving the payment.
Digitize the financial management of the business
It was time when the business owner required to keep all the finances and accounting related papers properly. But now, you are having the option to digitize the organizational finances, then why taking headache for dealing with the tons of paper. Also, the digital financial management app will secure each and every financial statement and you can retrieve them anytime when required.
The bottom line
So these are some key points helpful in managing business finances.