7 Tips for Organizing Your Business Finances

Whether you're a seasoned entrepreneur or just starting out, one of the best things you can do for your business is to get your finances in order.

Developing a strong strategy for your business finances will give you the strongest techniques to reduce business costs, forecast the future, and prepare for tax season. Here are 7 great organization tips you can start implementing today.

1. Start with the right financial position

The early stages of starting your business are the best time to establish long-term financial health.

First, a business plan acts as a road map. Traditional business plans often include everything from detailed financial figures to future plans and financial goals.

You can also research resources that can help you start your business. Many local, national, and private organizations can help you find funding and resources to start your business.

Still, you should also be financially prepared to put in a lot of money, especially in the early stages. While amounts vary widely by industry, data shows that small business owners spend roughly $40,000 in the first year alone.

2. Create a business budget

Creating a business budget is like creating a budget for your own home: you need to make sure you are spending and borrowing within your means. create Increase your wealth, not decrease it. Without a budget, you risk overspending and getting into debt.

Some questions you need to answer to create a realistic and flexible business budget include:

• How much capital do you have currently and how much do you plan to deploy in the near future?
• What are your company's fixed and variable costs?
• Do you have funds set aside for future expenses and emergencies?

Once you have a business budget, you can prepare a profit and loss statement (P&L) or income statement, which is a snapshot of your business's income and expenses over a period of time, like a quarter or fiscal year. You'll also need this document if you're applying for a business loan.

3. Choose the right accounting software

With the right tools, managing your business budget can be much easier and save you time when tax season comes around.

There are many accounting software programs on the market. Choose one that fits your industry, needs, and financial constraints. Many offer free or low-cost versions that you can upgrade to later if you need more features.

Almost all of these programs help with cash flow, payroll, invoices, paying vendors on time, and tax preparation. You don't have to hunt for receipts or worry about whether you have the cash you need to pay your bills. That information is stored on your desktop and is always available to you.

4. Open a business bank account

An important rule of organization as an entrepreneur or small business owner is to keep business costs separate from personal costs.

It's wise to have a separate savings account just for your business. Not only does a separate account help you keep track of your cash flow, it also protects your personal assets from lawsuits and audits if your company gets into legal trouble.

“It may take some getting used to figuring out how to separate business-related expenses from your personal finances,” says Bob Marshall, director of business growth and strategy for Wells Fargo's Small Business Development division. “It also takes time to set up business accounts and put systems in place to properly track your business finances. But this separation is important — it helps you determine the health of your business and makes your life much easier come tax time.”

You can also tinker with your accounts to make managing your finances even easier.

“I have separate accounts for operating expenses, payroll, expenses and taxes at the same bank, so I can be sure the money is there when I need it.”

— Sejal Lakhani BhattCEO of CloudWerxe and TechWerxe

5. Choose the right business credit card

As with savings accounts, don't fall into the confusing trap of mixing personal and business credit card transactions. Not only will it unnecessarily complicate your finances, but your personal cards won't give you the unique benefits of a business credit card when it comes to spending and organization.

How you choose a business credit card depends on your credit score and what you want from your account.

Some business credit cards come with free expense management tools: The American Express® Business Gold Card comes with an annual end-of-year summary, the ability to connect your account to Intuit QuickBooks, access to Vendor Pay through Bill.com, and more.

If you want to give certain employees access to your account, many small business cards offer additional employee cards for free, like Chase's Ink Business Preferred® credit card, which also gives you instant access to employee transactions, so you don't have to wait for expense reports to be submitted.

A business credit card can also help you build a business credit score, which is different from your personal credit score, and good business credit is essential for accessing future loans, insurance, and more.

6. Make regular reviews and audits a habit

Even with the best systems in place, things can get a little out of whack when things get busy. When this happens, all the hard work you've put into budgeting your business can be wasted if it takes too long to get back on track.

Mark your calendar to check in with your finances at least once a month, but more often is even better.

Lakhani Bhatt reviews her accounts receivable, accounts payable, and monthly invoices twice a month to ensure she catches any changes needed early. “Every quarter, I review the projects I want to undertake and check the pricing,” she says. “Every year, I do an overhaul of my vendors to see if I need any new technology.”

By prioritizing a review of your company's financial situation, you can ensure you're on track and adjust your budget if necessary.

7. If you don’t have time, delegate or hire

Eventually, you may find yourself overwhelmed with the demands of getting your business finances in order. Before that happens, take stock of your situation.

Are you worried about being able to pay your vendors and suppliers, or are your credit card bills increasing uncomfortably? Do you think your expenses might be too high but don't know how to bring them down? Are you behind on your quarterly estimated taxes?

Either way, if you are not able to manage your business finances yourself, it may be more effective to delegate it to a qualified and trustworthy person in-house or hire an outside professional.

A bookkeeper can take on responsibilities like monitoring expenses, paying bills, and recording transactions. An accountant can help with long-term financial advice and tax. Evaluate where you're lost and determine what type of support would be most helpful.

Conclusion

Strategically managing your finances is important to ensure the long-term financial health of your business. From creating a business budget to delegating or hiring when necessary, there are steps you can take to reduce business costs, prepare for the future, and keep your business successful.

Choosing the best business credit card for your needs is one of the most important components of any business financial strategy. The right card can not only simplify your finances, but it can also give you access to unique cardholder benefits that are only offered with business credit cards.

Whether you're just starting out or have been growing your business for years, there's never a bad time to start getting your business finances in order. Following our tips can help set your business up for success.