How to Organize Your Business Finances + Increase Profit
As a small business, franchise, or start-up, you likely have a lot to do. There is no shortage of business or to-do lists to complete. Besides all the different roles you take on, there is one business category that is essential to focus on, better known as your bookkeeping.
If your company is not making money, it’s a hobby, not a business. Properly organizing and managing your finances can help ensure you’re hitting your profit goals and contributing to your business’s success. Depending on your financial goals, there are many ways to organize your small business bookkeeping. Here are three great tips to manage your business's finances.
Record Your Transactions
The idea of recording your transactions might seem obvious, but it’s incredible how many businesses don’t keep track of customer expenses and payments. It’s essential to record any transactions that you make in your company. This includes things like customer payments or vendor payments to make sure your clients have paid you, and you’ve paid your vendors.
Recording your transactions is important to make sure your clients are paying you on time and that you’re not letting any funds slip through the cracks. Knowing this information, you can send an additional invoice to clients who owe you money and not unnecessarily bother those who have already paid you. Plus, it will help you determine how much income you’re making daily, weekly, or monthly, so you can feel confident you’re meeting your income goals.
Review Account Balances
Keep an eye on your account balances, including all banks, credit card companies, and 3rd party payment processors like Venmo, PayPal, or Stripe. You need to know what money is being spent when it’s being spent and the expense category.
Reviewing your account balances ensures that no unauthorized payments are going through on your accounts, whether that’s a monthly subscription you never meant to sign up for or a fraudulent charge. The sooner you can identify a problem, the sooner you can get your bookkeeping on track.
File or Digitalize Your Receipts
In your everyday life, you might be in the habit of throwing away your receipts as soon as you receive them. With a business, you must keep all your receipts to show proof of purchase and deduct your expenses on your taxes. Without evidence, you won’t be able to itemize your business expenses.
Many choose to keep their receipts in a folder, scan them to your computer, or upload them to an application. It doesn’t matter how you choose to file your receipts, as long as you have them handy.
Stay on Track
If you’re not investing in your bookkeeping and tracking your finances, you can quickly lose control of your business, end up not having enough money to pay your vendors, forget to charge clients, and not receive more money back on your taxes.
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