It is a sad fact that around 20% of small businesses in the US fail in their first year. Opening a business is tough, and making it successful is even tougher.
5 Money Management Tips For Small Business Owners
But do you know how to weather those crucial first few years?
The most important thing is keeping your finances in check. Read on as we give five must-know money management tips for small businesses.
Open a Business Bank Account
Opening a business bank account is one of the top budgeting tips. This makes it much easier to separate your personal and business finances. You also gain access to a number of advantages.
When choosing a bank account, check the fine print and services involved. Are there cash deposit limits and monthly service fees? What is their online banking service like and wiring allowances?
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Paying yourself a wage helps in a number of ways. Firstly, it stops you from pumping everything into daily operations and making your personal income short. Having this divide can help you live a financially stable personal life while building up the business.
Secondly, it makes it easier to manage your business finances. By knowing the wages you have to pay each month as a fixed amount, then you can budget accordingly.
Get Accounting Software
If you don’t hire an accountant, then you need to make sure you are keeping your money in order. That can be done with financial and accounting software, which will keep you on track when it is time to submit taxes.
Start with a program that also incorporates some sort of financial planner. That way, all of your calculations and predictions are in one place. You may even consider cloud-based accounting software so that you can access records and create invoices wherever you and your team are in the world. You can also opt for a business expense tracking software to monitor your company’s monthly spending. Employees will save a lot of time for their reimbursement claims and it will help them manage their expenses effectively.
Loans are a lifeline to small business owners. However, they can also be quite scary. Failure is always looming over your shoulder, and the last thing you want is debtors on your back if things begin to go wrong.
However, a loan gives you a lot more financial freedom. Especially in the beginning, it can free you up to invest in the business, allowing you to pay staff or buy new equipment.
Build Great Credit
You can build great credit by paying off debt as soon as possible. Make sure you are paying off any loans and clearing credit card balances quickly. Good credit will allow you access to loans and funding later down the line, which may be crucial for growth.
Stay on Top of Money Management
When you are building a business, chasing leads, and marketing your company, it can be easy to get distracted when it comes to money management. Get an accountant or quality software to keep you in check. You will then be free to work on the things that matter, such as making a profit!
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