A good financial condition holds your business together. Without the right financial management, a business is as good as doomed. Healthy finances allow your business to function smoothly. The thing is, not everyone is a financial guru. Chances are you’re not one either. But you don’t need to be a math genius to keep your company finances in check. Here are a few quick tips to help keep your finances healthy.
1. Track your expenses, Including hidden costs
What do you use your business money for? Whether it’s for office supplies, travel, employee meals, you need to track all your expenses. This applies for any hidden costs, too. For example, maintenance, upgrade, and training costs are not included in the price tag of new equipment, but they are costs nonetheless.
Once all the numbers are in front of you and you have taken the time to tally up total cost, you can easily make a proper financial plan, including a budget.
2. Establish a routine
One of the most important habits to keeping your finances healthy is by staying organized. But you won’t be able to do that without a system or routine to keep you on track.
It doesn’t need to be complex, but having a designated time every day or every week to go through your bookkeeping will help you stay organized. After all, it’s better overall to keep an eye on your accounting once a week rather than letting everything build up over a few months.
3. Don’t forget about your taxes
All businesses must pay tax on their income. Period. You need to start paying taxes from the time you make your first earnings. But the amount of tax you need to pay might vary, depending on your business and where you run your business.
4. Invest in accounting software
You might have already hired an accountant, but it’s always a good idea to invest in reliable accounting software. It can help you effectively track your finances and help you get an accurate picture of your profit, loss, and income statements. If possible, pick a cloud-based accounting software so that you can access your business financial data anytime and anywhere. This allows you to collaborate with your accountant or bookkeeper regardless of everyone’s current position.
5. Build and maintain an emergency fund
An emergency fund is money prepared solely for emergency purposes. The money is intended to help you pay for things that wouldn’t be normally included in your regular budgets, such as an economic downturn or large increases in facility or material costs. Ideally, you need to save three to six months’ of expenses in an emergency fund, but we think it’s better to save more.
A healthy finance indicates a healthy business. To keep your business finances healthy, you can start with the five quick tips above and don’t forget – good accounting and bookkeeping habits are the basic foundations for your business financial health!
To learn more on the factors of a healthy business, read “How Healthy is Your Small Business? 5 Signs to Look For”