Small businesses don’t tend to have a very high rate of survival, and a huge proportion of them fail because they are not in good shape financially. It doesn’t matter how much hard work and commitment that you put into your endeavour, if you don’t have an efficient financial system in place, you can never hope to grow and prosper. So, in this article, we will be looking closer at five basic small business finance rules which you should aim to follow closely.
Dedicated Bookkeeping
You need to ensure that you monitor all the incomings and outgoings of your business meticulously. Even if some expenses seem small and insignificant, they can easily add up over time. It may be a worthwhile investment to employ a dedicated financial professional who is experienced in handling these matters and can make appropriate suggestions for the successful running of your business.
Inventory Management
The last thing that you want is to end up buying unnecessary things which don’t improve your business in any way. So, you should monitor everything to make sure you are not ordering too much of a particular item. Record details such as purchase dates, purchase price, selling price, and selling date. Manage your inventory efficiently with inventory management software and you will help to free up some cash for your day to day transactions.
Separate Your Accounts
If you are planning on only using a single account for your personal and business transactions now is the time to reconsider. You are much better off separating your accounts so things don’t get overly confusing. It is likely that you will also have a credit card account, so it is worth checking out the best small business credit card before choosing one. If you pay for anything in cash, you need to make sure that you record these transactions carefully to give yourself the clearest picture of your business accounts.
Get Your Taxes Right
While it may not be the most pleasurable experience in the world to pay your taxes, there is no way that you can get around them. So, make sure that you don’t get yourself in trouble with the taxman as this can result in unnecessary expenses for your company. Again, this is where a qualified financial professional can help you out massively as they help you make sure that you are not overpaying in a taxation system which can be complicated.
Receivables and Payables
Finally, you should keep a close eye on what you owe vendors and what your clients owe you at all times. If you have clients who are consistently not paying on time, you need to ensure that you have an efficient invoice chasing system. Ideally, you will want to get your clients on a direct debit system so you know when you will be getting paid every month.
Following these five basic rules gives you a good starting point for keeping a closer eye on your small business finances.