Running a business isn’t easy; it takes time, effort, and money. That’s why it’s important to stay organized and aware of your financial health as an owner or manager of a small business. Use these tips to keep tabs on how much money is coming in versus how much is going out:
Set up regular savings
If you’re not saving a portion of your income regularly, do yourself a favor and start. It’s never too late to get started—and the sooner, the better!
You can automate your savings by setting up an automatic withdrawal from your checking account into a separate business savings account or investing in an IRA (Individual Retirement Account). There are several different options for IRAs: Traditional IRAs allow you to contribute up to $5,500 per year while Roth IRAs allow tax-free withdrawals if certain criteria are met after age 59½.
These accounts will help fund investments in your business so that it has further resources available when needed. If you need funding for capital purchases or other aspects related to growth, these accounts will be there for you when the time comes!
Organize your finances
It’s important to keep track of the money you bring in and spend. You might need to learn investment wealth management. Your business will thrive if you can plan and budget for expenses, as well as make sure you have enough money on hand to cover them. If you’re starting a new business, or just trying to figure out how much cash flow is coming in each month (and where it’s going), try using accounting software like QuickBooks for small businesses. This software can help you create and manage budgets, track spending habits, reconcile accounts once a month with financial institutions—and more!
Maintain a separate credit card for business use
If you’re a business owner, an important step you can take to avoid bad credit is to keep your personal and business finances separate. This means that all of your purchases—whether they’re made in person or online—should be listed on a different credit card than the one you use for personal spending.
To help ensure that this happens, consider opening up another credit card that’s solely used for business expenses. If you have a trusty sidekick who can serve as the point person in helping keep track of these expenditures (and their corresponding receipts), so much better!
When choosing which account to apply for, choose one with rewards points that come with it—you never know when those extra points could come in handy down the road! And don’t forget about annual fees; make sure there aren’t any hidden costs associated with using this particular piece of plastic before signing up.
Consider life insurance
Life insurance can be a great way to protect your family’s future. If you pass away, life insurance will pay out a lump sum of money that can go towards paying off any debt, funding college education, or investing in something like the stock market.
Life insurance is also helpful for saving for retirement because it allows you to invest more aggressively and take more risks with your investments. This is because your death benefit will still be available even if the market crashes and destroys all of your stock holdings—or if the company goes under and takes its employees’ 401k plans with it.
Finally, life insurance can help protect your business against financial loss in many ways:
- It can provide additional funds for startup costs when starting a new business;
- Life Insurance policies (including Term Life) are integrated into Entity Selection Factors (ESFs) which affect how much capital gains tax an entity pays when they sell an investment or asset held by them;
- If someone sues our company over some bad service we provided them but won’t settle out of court then we would have had to pay legal fees upfront without having gotten paid yet from our clients so having plenty of cash on hand makes suing less appealing since they know we won’t go bankrupt right away so there’s no guarantee that whatever settlement amount they want us to pay would even cover their actual damages plus legal fees.
Be aware of your business’s financial health
You’re a business owner and you know that it’s important to understand your financial position. What you don’t know is where exactly you stand financially. Do you have enough cash in the bank? Learn how to finance a business vehicle, property, and other expenses. Is there enough money coming in? How much debt do you owe? These are all good questions to ask yourself and others who work closely with your company.
The answers can help guide your decision-making process, whether it’s looking for ways to reduce costs or increase revenue, improve efficiency or profitability, manage risk better, and more effectively make decisions about how best to grow as a business entity.
Invest in employee benefits
You may have heard that your employees are your most valuable asset. This is a great way to think about it, but we’re going to go one step further and say that you should invest in your employees as well.
Benefits like health insurance, life insurance, retirement plans, and education can help attract and retain staff. A company that offers these benefits will often attract better candidates than one that doesn’t offer them at all or offers very basic benefits. Your business will also be able to make up for higher wages by offering other perks such as discounts on insurance or employee-only events like golf outings or wine tastings with interesting people (like us!).
Don’t forget about retirement saving
- If you are a business owner, your most important job is to keep your company humming along. But don’t forget about retirement savings.
- You should save at least 15% of your net income for retirement. That means if you earn $100,000 per year, you should be putting $15,000 away for your golden years. If saving that much seems impossible, start by saving 5% and increase the amount as time goes by until you are saving 15%.
- Investing in stocks carries more risk but also has the potential to yield higher returns than other options such as bonds or cash investments (which have lower interest rates). Whether or not this makes sense depends on how long ago it was since you started investing; if it’s been a while since then—say 10 years or more—then it might make sense now too because there’s less chance that an unexpected event will knock down stock prices over such a long period (unlike say during 2008-2009 when many people lost their jobs due to downsizing). On the other hand if only recently started investing then maybe stick with safer options like bonds instead until things feel less volatile again before making any big moves with investments.
Staying organized and aware
- Organize your finances
- Keep track of everything that comes in and goes out
- Stay on top of your finances, even when things are going well. The truth is that small business fail every day for many reasons, but not being organized is often one of them. You can avoid this by keeping a notebook or spreadsheet with all the information you need to know about the business’s finances (e.g., how much money comes in each month, and how much goes out). If you don’t have any experience organizing this type of information, start by talking to an accountant who can help set up a system that works best for you!
We hope you’ve found these tips helpful, and we wish you all the best as you build your business. Remember that financial organization is a long-term commitment and not something that will happen overnight. But with consistent work and careful attention to detail, it can be done!
Interesting Related Article: “How To Ensure You Make Right Financial Choices As A Small Business Owner“