7 Financial Tips for Business Owners
Personnel director...sales manager...head of operations...customer service manager...The list of roles and responsibilities can go on and on if you're running your own business today. Of course, with all the responsibilities you may have, finding the time to manage your personal and business finances can be challenging. Here are seven steps you should take to make it easier for you:
- Separate your business and personal finances. Though you may have used your personal finances to start your business, it's important to keep your business expenses and income separate from your personal ones. Make sure you have a separate business checking and savings account and debit/credit card. It will make tax preparation less complicated and will help you establish business credit more easily.
- Set up a retirement plan. One of the biggest drawbacks of self-employment is that you don't have the benefit of a big company 401(k) and matching contributions. There are, however, retirement plans designed for small businesses, including SEP-IRAs, SIMPLE IRAs, and Solo 401(k) plans.
- Automate your banking. A key part of managing your finances is controlling and monitoring your cash flow. Enrolling in services like online and mobile banking will allow you to monitor transactions and balances, which is especially important in managing day-to-day cash flow and guarding against fraud. You should also arrange to pay your bills electronically, which will help ensure they are always paid on time.
- Prepare for seasonal cash flow. If you have a business that's seasonal, managing your cash flow during slow periods can be particularly challenging. Be sure to put aside extra money to help manage periods of downturn. You may also want to have a line of credit that you can draw on when needed.
- Use a professional tax advisor. Though business owners are not afraid to do things on their own, there is one area where it pays to bring in a professional — tax planning. A professional tax planner can save you time and help you capitalize on opportunities to reduce your tax burden.
- Make a budget and stick to it. When running a business, planning is everything. That's especially true when it comes to budgeting. Take time to review your revenue, expenses, and business plans for the year and create a budget. Be sure to continually track and monitor your expenses to determine if you are staying within that budget.
- Develop a business banking relationship. It's often been said that behind every successful business owner is a solid banking relationship. A good business banker can help you gain access to the credit you might need, provide valuable business advice, and connect you with other professionals.
Ask Washington Trust
While you may not need to be an official controller at your company to take control of your business finances, we’re here to help your business succeed. Contact a Business Banking specialist at Washington Trust today!