How to Set up Your Business Finances for Success
By following a few best practices when setting up your business finances, you’ll feel confident and make better informed decisions about future growth.
Business owners are stretched in a million directions.
But if you follow a few simple best practices when you set up your business finances, you’ll have an easier time staying on top of your financials, and you’ll be empowered to make confident, informed decisions for the future of your business.
(Not to mention your life will be much easier when tax time rolls around.)
Step 1: Organize for success
Whether you’re working with an accountant or not, commiting to an organizational system for your business finances will make life exponentially easier.
Most financial tools offer some type of category-based organization workflow. The Tiller Simple Business Spreadsheet template includes over 30 common sample business categories, grouped and organized by type (income or expense) to get you started.
Make sure you’re taking advantage of all available deductions.
If you’re not sure about what business expenses might be deductible, check the latest IRS guidelines and consult with a tax professional who can steer you in the right direction.
For example, business meals may reduce the net profit that you have to pay taxes on, but possibly only up to a certain percentage.
Another aspect of staying organized is recognizing how money is coming in and out of your accounts.
Are your personal and business transactions co-mingled? It’s best practice to keep your business finances and personal finances separate and coming and going out of separate accounts.
If you haven’t already, consider setting up a separate bank account for your business with its own debit and credit cards to keep things tidy. Your accountant will thank you and your bookkeeping will be vastly easier to manage regardless of the financial tool you use.
Step 2: Track your business transactions
Now that you’ve implemented a great category/organization structure for how your money is flowing, it’s time to stay on top of categorizing your transactions.
This can be the tricky piece for many business owners who are already strapped for time.
Every Tiller-powered spreadsheet template updates automatically each day with your bank transaction and balance data. This makes it super simple to stay on top of categorizing. Not to mention everything is in one place.
And with the help of AutoCat, this process becomes even easier.
Keeping this record accurate throughout the year will help you maximize business expenses for tax savings. Even better, it will set the foundation for bigger insights on the financial health of your business.
And of course, don’t forget to keep a backup of scanned receipts and invoices. We recommend a simple photo taken with your cell phone and stored to your Google Drive for on-the-go receipt capture.
See: Scan documents with Google Drive and Android via Google
Step 3: Set up a business budget and projections
Part of staying organized and planning ahead is getting a forward-looking view of your business expenses.
While some business owners see a budget as unnecessary, consider it a guide to help you visualize the month-by-month financial picture for your business.
A business budget is a starting point to help you make adjustments over time and assess whether you should cut costs, increase spending in certain areas, and get a sense of whether your revenues (and profits) are moving in the right direction.
You can also use the manually add and reconcile features in the Simple Business template to help you project your business balances into the future. Then you get an even clearer picture of your business’ path to success.
Step 4: Scheduled maintenance
What good is a system for managing your business finances if it’s not consistently implemented? Set a weekly recurring session to update categorizations, ensure that income is recorded correctly, and review your business finances.
See: Add reminders in Google Calendar
Establishing habits like these are vital as you continue to grow your business.
Committing to even a 30-minute recurring weekly session will keep you in the loop, and help avoid unpleasant financial surprises. You’ll be able to confidently make good long-term decisions for your business.