Monthly Archives: July 2015

Simple Tips To Keep Your Small-Business Finances In Order

Accounting can cause headaches for small business owners. It’s the back-office tasks that never cross your mind when deciding to run your own business, and yet they suck up your time and make running a successful business that much harder. But there’s hope, and it starts with getting organized. Here are some tips to help business owners trying to tackle their accounting:

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Keep it separate. That new backpack for your kids isn’t a business expense, but your business credit card was handy so you used it. Sure, you can pay back your business for a personal expenditure, or the other way around, but if you’re going to do it right you actually have to record an accounting transaction. Things get complicated fast, and you don’t need that headache. By keeping separate bank and credit card accounts for business and personal, you’ll save yourself hours of work and make it easy to keep track of deductible expenses in one place. Some applications can automatically handle the behind-the-scenes accounting for crossover expenses, but even so, we recommend handling business and personal finances as independently as possible.

 

Call in a pro. Since the days of the abacus, accountants have been trusted and respected allies to small business owners everywhere. Their intimate knowledge of the profession as well as tax laws in their jurisdiction will save you money almost every time. I know how tempting it can be to save a buck and do it yourself, but it’s almost never more cost-efficient in the end. An accountant will almost always find more deductions and keep you penalty-free. On that note, the cleaner your records, the fewer billable hours you’ll have to pay, so make sure you’re organized year-round. But when things get technical or taxes are due, save yourself the money, time and headaches and call in a trusted professional.

 

Pencil it in. Actually, use a pen. A permanent marker even. Set aside about 15 minutes every week — that’s the equivalent of just one Facebook visit every seven days — to organize your finances, and don’t let other things take priority during this time.  You’ll have more insights into your business, be able to make more informed financial decisions and have everything organized when tax time approaches. Something always feels more pressing than your finances. But when you find the time every week, you’ll feel your stress levels — now and at year-end — fall fast.

 

Consider your people. When you’re looking for insights into your businesses spending, don’t forget to properly track what is likely one of your biggest expenses: labor. Whether you’re paying a full staff or you’re the only one on the payroll, make sure you’re tracking the costs of wages, benefits, overtime and any other costs associated with labor. By tracking your spending on labor, perks and benefits, you may find you have more money to incentivize your employees — or that you’re outspending your budget. Either way, doing the math now can help you make better decisions later.

 

Finally, don’t forget to get paid. This one seems pretty obvious, but you would be shocked at how many small business owners don’t properly track invoices and customer payments. If you’re not keeping proper records that you can make sense of at a glance, it could be months before you realize you have outstanding invoices. You could be collecting payments late, or missing some altogether. Make sure you’re properly tracking all payments due and recording when each invoice is paid, how long customers generally take to pay, and which customers you’ve had difficulties collecting payments from in the past.

Referenced From: http://www.forbes.com/sites/theyec/2012/10/24/5-simple-tips-to-keep-your-small-business-finances-in-order/

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4 Reasons Why a Realistic Startup Budget Is Key to Success

A startup budget serves as a road map for building any type of business. Yet, it’s a delicate balance. Taking a few risks during the startup’s launch is a great strategy (and generally reaps success in the end), but maintaining a budget is just as vital.

All in all, setting a realistic budget is a game changer for any startup. It helps entrepreneurs stay on track and keep their eyes on the ultimate goal.

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If a startup budget is constantly tweaked and never followed, then deep financial trouble may be up ahead. Here are four reasons why all entrepreneurs–big and small–should have a realistic startup budget.

1. A set budget helps you stay focused.
Calculating every cost in the present and future for a startup can be overwhelming, especially when there are unforeseeable expenses. However, mapping out specific costs (and, of course, setting aside funds for emergencies, too) is the best approach.

“The exercise of thinking through what will be required before beginning a project (i.e., counting the cost) is pretty ancient wisdom,” said Scott Peeples, the co-founder of peerfit. “It’s not just about estimating expenses either; it can end up shaping the strategy of the whole company.”

From staffing to machinery, entrepreneurs should estimate their startup budget. Having a set budget maintains focus on what or what not to spend, reinforces the startup’s progress and perseveres toward the end goal.

2. It’s OK to adjust your budget but stick to it.
Because life doesn’t always allow people to stick to their intended goal, flexibility is key. Sometimes startup owners need to readjust their budget more than once, and that’s OK. But it’s also best to readjust focus and keep the budget in mind.

“My budget was always very loose and flexible,” said Toby Sembower, the founder and CEO of Digital Brands. “What was most important to me was that I get to work with the most talented people possible and in the best work setting possible.”

Creating a startup budget is a dynamic process that fluctuates as much as the initial goal and company do. However, adjusting the budget is just as important as sticking to the original plan. Be open to change, but remember to stick to the revamped budget.

3. Avoid a half-built business.
Running out of funds is one of the worst repercussions when an entrepreneur doesn’t set or stick to his or her budget. Half-built businesses aren’t worth much to the entrepreneur or business world, so prioritizing costs helps avoid this doomed scenario.

Budgeting is all about moderation, so startup founders should balance both their budget and spending habits. Sometimes the budget needs to be larger, or the founder should cut back on some expenses.

“The obvious consequence of failing to make a budget is the increased probability of running out of resources to meet your objective-, like ending up with a half-built house,” Peeples said. “Track your cash flow and adjust your budgets every quarter. Learn from the numbers.”

4. Don’t dig yourself into a debt hole.
Having an unlimited startup budget may seem like an ingenious idea at the time, but startup owners will dig themselves into an abysmal debt hole in the end. Businesses that set a realistic budget steer clear if that trap.

A startup business may flourish while accruing debt, but success and profitability diminish once that debt needs to be reimbursed. Calculate each expense more than once, and determine what should be the startup’s best (and most realistic) budget. It’s better to catch costly expenses in the beginning rather than in the end when swimming in a pool of debt.

“Creating a detailed budget will force you to make decisions on what’s most important, and what’s not, in spending that money,” Sembower said. “Costs can get out of hand very quickly if you’re not adhering to a budget, which could leave you short on working capital for opportunities (or costly problems) that may arise.”

From: http://www.entrepreneur.com/article/247342