Next to “selling more,” the skill many business owners say they’d most like to improve is managing their business finances. From basics like banking and billing, to more complicated money matters involving financial reports and balance sheets, there’s much to know about setting up and managing the money side of a business.
It’s temping for many entrepreneurs to focus on making sales, closing deals and pumping up the P.R. while putting off mundane chores like bookkeeping. But tending to financial basics is critical to keeping a business on track.
Here are some keys to keeping your bookkeeping and general finances under control:
• Get the right software. Don’t even think about keeping your books manually or with spreadsheets. Low-cost, easy-to-use financial software for small business such as QuickBooks, or the free version QuickBooks Simple Start (both at www.intuit.com) are perfect for keeping everything in order. New Web-based solutions such as Netbooks (www.netbooks.com) are also great.
• Automate your invoicing, too. Online billing services that can effortlessly issue your invoices and keep track of everything are one of the most helpful Web-based small business services to appear recently. Check ‘em out, and put ‘em to work for your business. Look at Bill.com and FreshBooks.com in particular. The services are cheap and can help clean up a billing mess in an instant.
• Separate your business and personal finances. Many new business owners, and especially sole proprietors, fail to set up separate banking, bookkeeping and other systems to keep track of their businesses, causing confusion and potential tax headaches. Using money from your business to pay for personal expenses, for example, can get you in legal hot water, and at a minimum complicates your recordkeeping.
• Don’t delay; do it daily. If your business finances change daily, you should have bookkeeping systems that update daily as well. This should include daily sales, purchases and other transactions, and especially any cash transactions.
• Hire a bookkeeper. You don’t need to pay an accountant’s higher professional fees to handle routine bookkeeping chores. Many small businesses have part-time bookkeepers to help keep things in order. The American Institute of Professional Bookkeepers offers helpful information on how to evaluate a bookkeeper before you hire one.
• Reconcile. No, I’m not talking about making up with a spouse you’ve neglected due to business demands. Rather, review your bank statements and balance your accounts regularly. Don’t just toss statements into a stack. If you let days or weeks pass without updating records, you’ll soon be lost and errors may go unnoticed. •
Daniel Kehrer can be reached at
editor@business.com.
