If you're an entrepreneur, you must be good with money, right? Not always the case. Here are some money tips for business owners, whether you're a sole proprietor or have a handful of employees.
Tracking
All business related expenses need to be tracked. Even if you work in your vehicle, you need to have a file or container to put your receipts and invoices in that is designated just for business expenses. Get into the habit of not throwing any receipts away. If you are not used keeping all of your business receipts, pick something that will work for you. Pick a pocket of your purse to put every receipt in. Automatically put all your receipts in your wallet and empty it into a file weekly - or daily. Just find a routine that works for you.
Record Deposits Correctly
Your accounting software should be checked against your bank statements so that you can make sure your deposits match exactly. Also with returns, its necessary that they're recorded to the expense account that was originally used with the item was purchased.
Taxes
Don't get caught at tax time without the funds to pay your taxes. It is a good idea to set aside money from every deposit for this kind of expense. Taxes are paid quarterly in most businesses, and if you get behind on your quarterlies, you could end up digging a pretty deep hole for yourself. The toughest money issue to get used to for new business owners is that all money that comes in does not profit make!
Accounts Receivable
Watch your accounts receivable. Don't let late pay clients bring your company to its knees. Cash flow problems can be a business killer. If you are not comfortable asking your clients to pay their bills, it is important to find another person to do that for you. Often entrepreneurs and business owners start their business because they have a passion for their product or service, not a passion for bill-collecting. Timing can also be a factor here that a second pair of eyes trained in bookkeeping can help you overcome annual cycles of sales highs and lows. Something as simple as adjusting due dates could make the difference in cash flow.
Enter Transactions
Procrastinators beware! Don't wait until the end of the year to enter your transactions into your accounting software. In the very least, enter your transactions the week your bank statements arrive. You will get to know your business better if you balance your incoming and out going transactions on a regular basis. Schedule a time on your calendar, just like any client meeting or sales appointment to do your books. If you are too busy for this, seriously consider getting a bookkeeper.
Get a Bookkeeper
Your bookkeeper is not your accountant. A trained bookkeeper is one of those expenses that bring a return on your investment. They know your accounting software better than you and what takes you hours, takes them minutes. If data entry is what you started your business for, by all means, go to town. When you think about what your time is worth, how many sales you could be making instead of searching for a lost deposit, or if you think "I'll do the books next week" each week, time to hire a bookkeeper.
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