As an entrepreneur, you have enough on your plate without struggling to manage finances. Proper budgeting and money management are critical for small business success and growth. Implement these tips to master the financial side of running a small business:
Track Everything
Utilize accounting software or spreadsheets to log every expense, invoice payment, and earnings transaction – no matter how small. Categorize transactions to evaluate spending patterns and tax deductions. Detailed tracking provides the visibility needed to make smart money decisions.
Set a Budget
Create an operating budget outlining projected earnings and costs based on historical performance and growth goals. Factor in taxes, payroll, loans, supplies and other necessities before discretionary spend. Compare actual monthly totals to your budget to adjust overspending categories.
Build Savings
Consistently depositing a portion of earnings into a business savings account buffers against unexpected expenses and downturns. Build towards an emergency fund that covers 3-6 months of operating costs as a foundation for security. Automatically transferring funds after each deposit prevents temptation to spend.
Pay Taxes Quarterly Don’t fall victim to a huge tax bill by overlooking quarterly IRS payments. Calculate estimated taxes owed on revenue from each quarter and pay online via EFTPS. This prevents unwelcome tax debt jeopardizing business or personal finances down the road.
Ongoing number crunching is tedious but necessary business blocking and tackling. Staying financially organized aids short and long-term decision making. What other money management tips would you suggest to fellow small business owners? Please share in the comments!