Five Tips for Getting Your Business in Financial Order

Larry Alton

January 25, 2018

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With tax season around the corner, you're probably feeling unprepared, especially if you've reviewed your budgets and spotted cash flow issues. According to a United States Bank study, 82% of businesses that fail do so because of cash flow problems—particularly, poor cash flow management.

But don't all small businesses struggle with money at the start? How do you know if you have a cash flow problem? "If your expenses exceed your cash, then you have a cash flow problem," Michael Flint of Preferred CFO says. "It's important to note that your expenses, especially during the early growth stages, are most likely going to be greater than your revenue. You're still trying to validate R&D; go to market; and figure out sales, marketing, admin costs, and contractor relationships. It's also important to remember that your company will only be successful if you can eventually bring in more than you spend."

To get to that point, consider some serious financial reorganization. As you work to get your business finances in order, here are some ideas:

1. Use Technology

Apps, software, and other technology can make a lot of your financial organization frustrations disappear. You're probably using an Excel spreadsheet or some basic software to handle your financials, but there's much more out there.

Here are some financial apps and software worth looking into:

  • FreshBooks

  • Xero

  • Square

  • PayPal

  • Mint

  • TurboTax


  • Gusto

  • Expensify

  • Zoho

  • Neat

  • Sage One

  • 2. Separate Business and Personal

    "[This] starts with tracking your business expenses separately from your personal, even though, initially, it may feel like they are one in the same if you are a one-man shop," Cynthia Heil, a financial planner in Florida, told Entrepreneur.

    It's easy, as a small business owner, to use a personal credit card for business purchases. If you're a solo business owner, it all comes out of your paycheck anyway. Right? Not exactly.

    Keeping your business and personal accounts separate not only makes it easier to keep taxes straight at the year's end; it also protects your credit from plunging if your business encounters a problem. To make it easier, take out a line of credit that's used only for business expenses.

    3. Cut Down Office Costs and Other Overhead

    Do you know how much you're spending on heating and cooling costs? How about on office supplies? Many small business owners don't closely track their spending in these categories, and spending can easily get out of hand.

    It's true that you need to spend money to make money. But if you were to examine your finances and identify problematic spending areas, a lot of the costs of running a business could be cut down. For example, there's little need for paper when email and cloud storage can do the trick. Look for little ways to cut spending and find more financial freedom in your budget.

    4. Hire a Financial Expert

    When tax time comes around, you'll be glad that you have an accounting service or another financial expert to handle the details.

    "You can get away with doing your own bookkeeping and accounting when you first start out," New York-based CPA Maggie Kirkendall told Fundera. "But once you're ready to file tax returns, you often realize you didn't know enough or didn't want to spend enough time to figure it out, and that's when I suggest getting a bookkeeping or accounting service to help you maximize any tax advantages."

    5. Keep it Simple

    Taxes and business financials are only as complicated as you make them. Keep a separate account for your business expenses, and use a single card to make all your purchases. Any reimbursements will come from that account. Use cloud-based accounting software to keep track of everything.

    Don't get carried away with taxes, either, advises Matthew May of Acuity. "There are only about ten line items most companies need to track for the IRS," he says. "Start with the end in mind: pull out the tax form that applies to your business, choose the categories that apply to you, and lump expenses in those buckets as the year goes. Don't slip into the trap of adding 50 lines because you are unsure what to track."

    Small businesses shouldn't have overcomplicated, unorganized finances. With the right tools and a little time, you can whip your finances into shape just in time for tax season.

    Larry is an independent business consultant specializing in tech, social media trends, business, and entrepreneurship. Follow him on Twitter and LinkedIn.

    Opinions expressed by the author are not necessarily those of WITI.

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