10 Effective Ways to Manage Your Business Finances Effectively
Starting a business is an exhilarating experience, especially when you are burning with creative ideas focused on your field of interest. However, there are aspects of business management that are rather complex and never fun. Business finances are one of these areas.
The great news is that with all the amazing solutions available today, you don’t have to be a financial professional to manage your business funds and keep books effectively. The following 10 tactics will take out most of the stress from dealing with your company’s money flow.
#1. Invest in Quality Bookkeeping Software
This is the first thing you should do when starting a business. Bookkeeping is vital not only for paying taxes but also for understanding your company’s financial position and developing budgets.
Bigger businesses usually have accountants who utilize professional software. However, today anyone can master the basics of bookkeeping and ensure their records are in order. You just need to purchase a high-quality bookkeeping program. These solutions are easy to use as they automate the majority of the operations, so you only need to have a basic understanding of accounting.
#2. Accept and Use Various Types of Payments
The market today is extremely competitive, so you have to offer your customers the highest level of service. Convenient payment options are a major part of this, and with the abundance of transaction methods available today, you should strive to offer as many as you can.
You definitely need to accept cash, checks, credit and debit cards, as well as several online payment options (e-wallets, online transfers, etc.). Being flexible will not only help you win more customers but also allow you to make your own payments more easily. Planning your company’s money transfers wisely will enable you to reduce the size of transaction fees.
#3. Create Your Own Financial Dashboards Fast
A financial dashboards is a truly fantastic tool that allows you to visualize a variety of financial processes and make managing your funds, and business as a whole, much easier. Today you can use a specialized solution to create custom financial dashboards that will meet the specific needs of your company.
Make your own diagrams of the work capital flow, cash conversions, and other important financial operations. The simplicity of dashboards allows you to track your business’s progress with ease.
#4. Use Mobile Payment Systems
Mobile payment solutions, like GoPayment from QuickBooks, are perfect for small businesses. This software allows you to accept and make payments via a mobile device. In essence, you can use it to manage the majority of your financial transactions from your smartphone, so you have 24/7 control of them.
Choose a versatile solution that will integrate into your bookkeeping software effectively. It also needs to allow for customization so that you can make personalized receipts.
#5. Keep Tabs on Your Money Movements
It’s vitally important to trace all the movements of your capital regularly. Evaluating the numbers will show you how your business is faring and determine which areas perform most efficiently. You also need to study this data to develop a reasonable budget and track your progress to see if you fit within its limits. Various types of bookkeeping software, as well as effectively designed financial dashboards will make following your progress easy.
#6. Have a Financial Pro Draw Up Your Payment and Deposit Terms
No matter how small your business is, you need to have your payment terms outlined in a concise and efficient manner. It can be a very difficult thing to do for a non-professional because you need to take into account both the legal and financial side of monetary transactions.
Therefore, it would be best to employ the help of a qualified professional who can help you understand what kind of payment and deposit terms will work best for your business. An expert will also draw up all related paperwork to prevent any legal issues.
#7. Remember to Track Vehicle Mileage
Many business owners tend to forget this as mileage isn’t directly related to funds. However, to benefit from the tax deduction for the business vehicle gas you’ll need to provide IRS with a mileage logs during audits. Please note that in some cases this isn’t a mandatory requirement, so consult your tax expert on what kind of records you need to have.
You can track mileage by recording the odometer readings every day and compiling them into a log or by using a specialized app, like MileIQ.
#8. Plan Your Taxes
Proper tax planning can make all the difference for your business as not doing your taxes right can cause very serious problems. What you need is to consult an expert on taxes BEFORE you start your business and have them help you develop the most efficient scheme.
A professional will be able to advise you on the best tax reduction strategies available for your enterprise, which may help you free up a lot of funds you can use for growing your business. Note that taxes are time-sensitive, so not applying for deductions at the right moment can lose you many opportunities.
#9. Separate Your Business Accounts from Personal Accounts
It’s imperative to do this as quickly as possible. This will allow you to use the benefits of being incorporated, especially the measure of legal protection that comes with this title.
Using your personal account for business when you claim to be a formed and operating corporation means you are commingling expenses (business and personal), which can cause trouble during audits. This can lead to your losing the chance to deduct some of your business expenses from taxes.
Even if you aren’t incorporated, separating accounts would be beneficial and will allow for easier and more effective financial management overall.
#10. Manage Your Business Finances Through Advanced Solutions
Managing your business’ finances may seem like a daunting task. However, with the advanced solutions available today, you don’t even have to hire a professional accountant for your startup. Instead, you should focus on learning the basics and purchase effective and easy-to-manage software solutions that will make bookkeeping easy. You also should go for versatility with payment options to allow your prospective customers choose the method of transaction that meets their needs best.
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