Poor cash flow is the number one reason businesses fail. If the numbers don’t add up, you’re going to find yourself in trouble sooner rather than later.
But the thing is, not everyone is a numbers person, and that’s ok. But what’s not ok is not addressing this or having measures in place that ensure the numbers look good, even if you can’t bear to look at them or you have no idea how to stay on top of them.
Let’s take a look at some ways you can keep your numbers in check, even if it’s the last thing you want to do.
Separate Business and Personal Finance
If you already do this, great. If not, this is at the top of the to-do list.
It is vital for all business and personal expenses to be separated because if they’re merged, things will get chaotic and fast, especially come tax season.
Have a separate business and personal bank account. Don’t use your personal information for business transactions and vice versa.
Why?
It creates a paper trail that shows exactly what is coming in and going out. No messing, no confusion, just clear records.
Choose Your Bookkeeping System
You have options here. Suppose you don’t mind a bit of work with your accounts: you can opt for a simple spreadsheet. It’s free, and if you’re just starting, it could be all you need.
Another option is to use accounting software to take care of things for you.
Wave is a free option for you to consider. QuickBooks is the industry standard for small businesses, and Xero is popular because it is user-friendly and scalable, so you can move forward with it as you grow.
If you can, choose something that offers features you can automate — banking, expense, tax reporting, etc., it’ll just make life easier.
Lastly, if you want to be totally hands-off, you can use a bookkeeping service to help you out. This is ideal for your everyday expenses and financial management — some might be able to help you out with taxes or paperwork, but to keep on top of the numbers on a daily basis, a bookkeeper can be the right choice.
Create Routines
Much like you would for your daily operations, create routines to keep finances in check.
Choose a date each month so you know it’s coming up, and keep a loss-free day in your diary for this. Non-negotiable.
For this, you will do things like reconciling bank transactions, reviewing income and expenses, checking cash flow, and setting goals. It’s also handy to scan any physical receipt you have here, too, so you don’t misplace them or put them “somewhere safe.”
Prioritize Taxes
The last thing you want to be doing is scrambling to pay your taxes because you left everything to the last minute.
A good tip is “pay your taxes” monthly or even weekly if you prefer. Get advice from an accountant on the types of taxes you will be paying and how much these could be, and take a portion of your takings (and wages if you’re paying yourself a wage) and put it into an account that you don’t use.
This way, when it comes time to pay your taxes, you can access the money and not worry about having to find a lump sum at once.