If you’ve been running a business, you understand the challenge of managing your company’s finances. But learning how to manage your business’ finances is one of the most important things you can do because it can help your company grow and protect it from potential threats along the way. Here are a few things you can do to better manage your business’ finances.
Keep Track of Income & Expenses
There’s nothing more important than tracking your income and expenses because when tax time comes, you’ll have everything in order to pay your business taxes on time and without penalty. Learn how to calculate your company’s net profit, expenses, gross revenue, and your break-even point. That means learning how to use a balance sheet, understanding what an income statement is, using a revenue forecast, and using a cash flow statement. Consider a tool like QuickBooks to help you easily manage and track income and expenses. If your employees are using your company’s credit cards, you can also use software to track spending in real time using corporate cards. This is to avoid overspending and have all the necessary records in one place.
Create a Solid Billing Strategy
Managing your business’ finances means you’ll need a solid billing strategy to ensure that you get paid on time. That means you’ll need to manage your cash flow to make sure your business is operating at a healthy level each day. If you have customers that consistently pay late, change your payment terms to give incentives for them to pay. For instance, you could offer a two percent discount off the total bill if the customer pays the invoice within 10 days.
Protect Your Company Data
While there are numerous business expenses you’ll likely have to deal with, one you should make sure to invest in is comprehensive identity theft protection for your personal, employee, and financial information. It’s crucial that you take the right measures to keep your data safe to prevent theft or loss. Take advantage of the LifeLock discount to save up to 30 percent on your first year using the identity theft protection service. It comes with things like dark web monitoring, bank account activity alerts, online annual credit reports and scores, breach notifications and 24/7 live member support.
Keep a Separate Business Account & Pay Yourself First
Many entrepreneurs make the mistake of keeping their business and personal money in one account. But that’s not a great strategy, especially when it’s time to do your business taxes. You could actually end up paying more money on your taxes with this approach. Instead, open a business bank account at your local bank branch. They’ll want to see proof that you’re an actual business, so bring your EIN number and your ID. Or, you could just open up a separate personal account and use it for your business expenses. But make sure you pay yourself from your business income. The standard rate is about 10 percent if you’re just starting out with no employees.
Managing and Protecting Your Data
Creating good financial habits from the start can help you grow and expand your business when you’re ready. Investing in tools to help you manage your finances is a smart business decision. But protecting your company’s personal, employee, and financial data is just as important. That’s why it’s essential that you take action to make sure your data and systems are safe and secure from potential threats.