Pay yourself.
If you’re running a small or midsize business (SMB), it can be tempting to put everything into your day-to-day operations. After all, that extra capital can often go a long way in helping your business grow. Small business owners shouldn’t overlook their own role in the company and should compensate themselves accordingly. You want to ensure that your business and personal finances are in good shape.
Invest in growth.
It’s important to set aside money and look into growth opportunities, which can allow your business to thrive and move in a healthy financial direction. Edgar Collado, chief operating officer at Tobias Financial Advisors, said business owners should always keep an eye on the future.
Don’t be afraid of loans.
Loans can lead business owners to worry about the financial repercussions of failure. However, without the influx of capital you obtain from loans, you may face substantial challenges when trying to purchase equipment or grow your team. You can also use loan proceeds to boost your cash flow and thus face fewer issues in paying employees and suppliers on time. Plus, the best business loans come with terms and rates that many small business owners can easily accommodate.
Keep good business credit
As your company grows, you may want to purchase more commercial real estate, acquire additional insurance policies and take out more loans to facilitate these pursuits. With poor business credit, getting approval for these transactions and acquisitions may be more difficult.
To keep good credit, pay off all your debt funding as soon as possible. For example, don’t let your business credit cards run a balance for more than a few weeks. Likewise, don’t take out loans with interest rates that you can’t afford. Only seek funding that you can quickly and easily repay.
Have a good billing strategy
Every business owner has a client that is consistently late on their invoices and payments. Managing small business finances also means managing cash flow to ensure your business is operating at a healthy level on a day-to-day basis. If you’re struggling to collect from certain customers or clients, it may be time to get creative with how you bill them.
Spread out tax payments.
If you have trouble saving for your quarterly estimated tax payments, make it a monthly payment instead, said Michele Etzel, owner of Bayside Accounting Services. That way, you can treat tax payments like any other monthly operating expense. You can also use the best online tax software platforms to streamline your tax payments.
Monitor your books.
This is an obvious practice, but it’s a very important one. Do your best to set aside time each day or month to review and monitor your books, even if you’re working with a bookkeeper. This will allow you to become more familiar with the finances of your business and provide you with a window into potential financial crime.
Set up good financial habits.
Establishing internal financial protocols, even if it’s as simple as dedicating a set time to reviewing and updating financial information, can go a long way in protecting the financial health of your business. Keeping up with your finances can help you mitigate fraud or risk.
Plan ahead.
There will always be business issues that need to be addressed today, but when it comes to your finances, you need to plan for the future. “If you’re not looking five to 10 years ahead, you are behind the competition,” said Tina Gosnold, founder of QuickBooks specialist firm Set Free Bookkeeping.
