Separate your business finances from your finances
If you are running any business, then you should separate your business finances from your finances. Running both finances as one will likely kill your business since you won’t account for business finances spent. This means that you might end up spending your business finances as your own or take help from Archimedia accounts firm which can help you in managing your accounts. And as such, this will derail your business to bankruptcy.
Perhaps most importantly, separating your finances will ensure that your finances are protected from legal trouble. For instance, if you mix both your finances, your finances will likely be taxed.
SO, HOW DO I SEPARATE MY FINANCES?
Separating your finances is as simple as the ABC. All you need to do is open a commercial account to house your business funds.
Pro tip: Go for an account that can wire allowances, support online and mobile banking capabilities, and finally, a business account that can support numerous transactions at once. Going for such a business account will limit the number of times you have to visit the bank. Instead, it will make your experience pleasant and give time to focus on your business.
BE YOUR OWN ACCOUNTANT, AND UNDERSTAND THE BASICS OF ACCOUNTING
If you are running a small business, then the chances are that you can’t hire an accountant. And if you did hire one, they’d charge you a massive chunk of money, thus reducing profits. So, with that in mind, the best way to go about this situation is to be the accountant of the business.
Yes, this might seem like a chore; however, the best way to monitor your business progress is by being the accountant. To do this, start by understanding the basics of accounting. Get to know what a balance sheet, cash flow statement, and income statement is. Understand how they work and how you can draft one of each yourself.
Once you’ve mastered the basics, get to the math and the calculations. These can be done daily after dinner or even weekly. If this is too much work, you can use free accounting software and monitor your progress in a matter of seconds.
TRACK YOUR EXPENSES
The foundation of any successful business is an accurate system that tracks business expenses. This system is crucial since it allows one to track business growth and keep track of costs. A good system that can account for deductible expenses enables you to monitor your zone, green or red. It allows you to make the necessary adjustments that will improve your financial statements.
So, with that in mind, establish a system that tracts any payments and taxes you’ve made. Start by keeping and organizing every receipt and essential documents to your business. Record every cent you’ve spent on travel, meals, transport, repairs, internet, entertainment, etc. Account for all the above, and you’ll never go wrong with your business. You’ll know when to cut costs and what expenditure is killing your business.
SET UP A PAYROLL SYSTEM
Most successful businesses are centered around a good payroll system, even if it’s a one-person show. If you are running a business and you overpay, then you’ll likely kill the company. On the other hand, if you underpay your employees, then you’ll kill their morale, and they’ll steal from you. The worst scenario is that your business can even face closure by the labor board.
As a businessperson, you need to find the right balance when paying your workers. If you are paying someone, pay them based on the effort and number of hours they give. Also, as you hire someone to work for you, determine whether they’ll be your employee or a contractor. Understand the difference between the two, what they bring to the table, and how much they cost.
Pro tip: Include yourself in the payroll as an employee. Pay yourself for the number of hours you invest in the business. If you are running a business, then it only makes sense that the company pays you. Last but not least, do not over/underpay yourself, instead pay yourself a deserved chunk of money.
THE DOS AND DON’TS OF MANAGING A SMALL BUSINESS
Don’t spend prematurely!
Rent a place instead of buying a base of operation.
Always tend to legal fees as soon as possible.
Don’t be afraid to seek a loan!
Don’t expand, minus thinking things through! Ensure cross your (t)s and dot your (i)s before going big.
THE BOTTOM LINE
No matter what your background in entrepreneurship is, managing a small business can be very challenging. This is evident since most companies have ended up in ashes within months. Luckily, if you were to implement the above how-to guide, you will likely become one successful CEO.
Shirley Mist has been involved in fashion and design for many years. She has also written extensively for many online publications. She currently writes for The Tribune World and is a valued member of our team.