The number of small businesses appearing each year is increasing. More and more excited entrepreneurs are taking the leap and getting start-ups off the ground.
While it’s great to be full of enthusiasm and motivation, starting and running a small business takes a lot of hard work. It’s not easy trying to grow into a successful brand and competing with the millions of other businesses that are out there.
One of the most challenging parts of starting up a small business is managing your finances. You need to determine your budget, monitor your profits, and sort out your taxes…it can get complicated, especially if you’re not very knowledgeable about this sort of thing.
Many entrepreneurs choose to outsource the management of their accounts to a registered accountant or bookkeeper. This is a great option if you have the funds, but if you’re starting your new business on a budget, outsourcing might not be feasible.
If you’re looking to manage your own accounts as a small business owner, here are some simple steps to make things much easier for you.
Open a Business Bank Account
If you want to run a business, you’re going to need a business bank account. This will allow you to store your funds separately to your personal account, which makes things much easier when it’s time to pay your taxes at the end of the year.
Having a business bank account makes it easy to monitor your income and expenses. It also protects your personal assets in case your business goes bankrupt or you receive a hefty lawsuit.
Be sure to check the laws in your country regarding this. It is a legal requirement in some areas to have a separate business bank account if you are an LLC or a corporation.
Track Your Numbers
Effective bookkeeping is key to success for any business. It involves monitoring the growth of your business by accurately tracking your income and expenses.
It also enables you to build financial statements and prepare your tax returns quickly and efficiently. This is made even easier by using a bank statement example online so you can gain a deeper understanding of your money flow.
Great bookkeeping ensures you don’t overspend and gives you a great insight into the direction your business is heading, so you can make accurate predictions and forecasts.
Create a large spreadsheet to track your total income, expenses, and profits. Record all of your business transactions and associated expenses so you can collate the information when you file your taxes each year.
To make your spreadsheet, you can use Microsoft Excel or other, more complex bookkeeping software. Make sure to choose the software that has all your needs such as tracking expenses, bill payments, corporate cards, and employee expense reimbursement feature wherein you can instantly send payouts to your employees.
Identify Your Tax Obligations
Taxes can be confusing! They vary depending on where you live and the type of business you run. Research your local state’s rules and regulations so you know exactly what your tax obligations are.
If you’re self-employed (sole proprietorship, LLC, or partnership), you will need to file tax returns. Make sure you file your return on time to avoid penalties or legal issues. Also, remember to set aside some of your income each month so you have enough to pay your taxes at the end of the year.
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