Are you a small business owner struggling to keep your business afloat? If so, you’re not alone.

Managing your small business’s finances can be difficult, especially when you’re busy running the day-to-days of your business. But with our quick financial tips, you can manage your books hassle-free and keep your business running smoothly. Let’s get started!

#1. Start With a Balance Sheet

The first thing on the list is to put together a balance sheet. Given that controller accounting is part of your job as the owner, a balance sheet will give you an overview of your budding business’s assets, liabilities, and equity. 

Your balance sheet will show you how much money you have to work with and how much debt you have. Preparing this financial statement will help you make sound decisions on how to use your business’s cash properly. 

For instance, if you have more assets than liabilities, you may want to reinvest some of your profits back into your business. Or, if you have more debts than assets, you may need to take out a loan to finance your growth. Either way, a balance sheet is essential for any small business owner.

#2. Analyze Your Cash Flow

Maintaining a sustainable balance between profit and loss is essential to keeping your business open. Looking closely at your positive and negative cash flows can help ensure that you are making more than you are spending. 

The cost-benefit analysis (CBA) technique can be helpful in this regard. This technique involves evaluating the costs and benefits of a potential business transaction to determine whether it is worth pursuing. 

For example, if you are considering reducing your advertising budget, you would need to consider how much revenue you might lose as a result of reduced exposure. By carefully considering all of the costs and benefits associated with a decision, you can make choices that will help to improve your bottom line without sacrificing quality.

#3. Pick a Method of Accounting 

Small business bookkeeping has two primary options for recording purchases: the accrual method and the cash method. Each approach has its benefits and drawbacks, so choose the one that makes the most sense for your small business. 

The accrual method is generally confusing, but it gives a more accurate picture of your financials. On the other hand, the cash method is simpler but can create discrepancies between your books and your bank balance. 

#4. Get the Best Accounting Software for You

Do you need a simple financial tool that will keep track of your profit and loss, or do you need something more comprehensive to handle your invoicing, inventory, and employee payroll? Once you know what you are looking for in a financial tool, you can start narrowing down your choices.

To select the right financial software for your small business, take the time to test out as many as possible since most of them have free trial periods. You can also ask other business owners for their first-hand experiences with different accounting software.

#5. Set Aside Money for Taxes 

Most business owners are obligated to pay estimated tax payments four times a year. If you have difficulty paying off the quarterly amounts, we highly suggest paying your taxes monthly and treating them like any other operating expense.

#6. Learn to Get Business Loans 

You can secure a loan for your small business for many reasons, from purchasing inventory to funding marketing campaigns. Plus, you can use loans to pay for operating expenses such as supplies and employee salaries. Getting a business loan is a big decision, but it can be a great way to finance your small business.

When getting a loan, consider these:

  • Check the conditions and terms of the loan, such as the payment period.
  • Evaluate the interest rate and see how it will impact your business’s health.
  • Compare offers from banks and accredited lenders before making your final decision.

#7. Hire Financial Experts for Help 

Not all business owners are well-versed with accounting and bookkeeping. While it’s important to have a broad skill set, there are some areas where it pays to have a specialist. One of those areas is finance.

Financial professionals like CPAs can provide the insight and guidance you need to make smart business decisions, thus maximizing your profits. They can also help perform business tasks, so you can dedicate your time and energy to pursuing other business ideas. 

Final Thoughts 

That’s it for our crash course in small business finance! We hope you feel more confident with our tips for managing small business finances. 

By starting with a balance sheet and cash flow analysis, you can get a good understanding of where your business stands financially. From there, you can pick the accounting method that works best for you and start setting aside money for taxes. With the right software and help from financial experts, you can make managing your small business’s finances a breeze.

For more financial tips and helpful guides like this one, check out our other articles on small business finances.

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