When starting a new business, it’s inevitable that you’ll face a number of challenges — and money concerns will most likely sit at the top of this list. Many of the financial challenges that they meet are related to funding, cash flow and savings. Here are a few tips to deploy that will help you manage and control your finances as best you can as a novice business owner.
1. Keep Business And Personal Expenses Separate
Mixing business and personal accounts can lead to a myriad of problems, including personal liability, litigation financing, tax issues, mixed up accounting records, etc. If circumstances get tough, fight the urge to bail your business out using personal funds, as this will only prove problematic in future. If you’re still using a personal bank account for business purposes, stop what you’re doing immediately! It’s as easy as 1, 2, 3 to open a bank account dedicated to business-use only.
2. Don’t Delay Outstanding Bill Payments
If you don’t pay all your business bills on time, then get ready to take a hit when those late fee charges for loan payments and credit cards come knocking on your door. Even when you pay minor late fee charges on utility bills or vendor bills, they can add up and cost you a pretty penny. The same applies to taxes – pay them late and you’re looking at unnecessary and often serious penalties. This also applies to pesky banking fees that can really add a dent in your wallet. You might want to check out Bank of America banking fees or any other large bank before you open up an account with them, just to see if the convenience of a big bank is worth the cost.
3. Always Have Extra Cash For Rainy Days
This is certainly spelling out the obvious, but it goes without saying that you’ll be facing ups and downs throughout your first and even second year. In fact, you may often fall short of sales or collection forecasts. That’s why it’s always a sound idea to have a little reserve cash on hand, just in case you need to cover wages or other business expenses. Open a bank account for these “rainy days” and make sure you keep adding cash each month to your emergency fund.
4. Purchases – Timing Is Everything
At any given point in time, you may have to face low cash flow, which is why it’s all the more important to time your purchases well. Make it a habit not to buy any business assets or incur any additional expenses unless you’ve cleared all your bills for the month. Furthermore, business purchases can be timed in a way that can cut down your tax liability. For instance, right before the end of the business year, make tax-deductible purchases, like for supplies, so you can claim them on your tax return, maximizing your money saving tips.
5. Super-Important: Monitor Your Spending!
Are you keeping track of how much cash you’re spending each day, week, and month? Or what exactly you’re spending it on? Are these purchases really necessary for the growth and maintenance of your new business, or are they more of a personal expense? Unless you monitor your spending, unnecessary bills might surprise you at the end of each month. And you don’t need this! It’s so easy to use checks or a debit/credit card to buy a new coffee machine here or to take your employees out for lunch there, but always keep in mind if it’s really worth it. Pr otip: regular accounting books management is a great way to track your expenses.
6. Accept Payments In Several Ways
In today’s modern markets, there are many ways to receive payments including cash, check, credit card, Apple Pay, Bitcoin and more. Make it easy for customers to pay you so that you can receive payments quickly. Then, you can transfer that money to your bank account quickly. This will ensure that you cash flow remains high and you can continue fund the business’ growth. By accepting payments in several ways, business owners can better manage money.
Happy saving, tracking, and spending!