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Keep Your Business Finances in Order With These 3 Tips

by
Mike Kilmer
on
9/14/2016
Keep Your Business Finances in Order With These 3 Tips

If you had to make a list of the biggest issues business owners face on a daily basis, the vast majority of them can probably all be traced back to a single source: their finances. Many see keeping business finances in order as something of a necessary evil; they do just as much as they have to in order to avoid getting in trouble with Uncle Sam. Yet at the same time, a huge number of potential problems throughout the day — from keeping track of payments and invoices and receipts and everything in between — can all be linked directly back to this problematic perspective.

If you feel as if your business finances are causing you stress because small problems keep turning into bigger and more complicated ones, take comfort in the fact that the reverse is true, too. By getting help and making an actionable plan regarding your records NOW, you find that even things that used to cause you frustration such as revenue and expense records are easier as a result. If you really want to end this cycle of financial chaos now and keep your records in order, you’ll want to keep a few key things in mind.

1. Personal and Business Finances Are NOT the Same Thing

One mistake that many small business owners in particular make that leads to a lot of headaches down the road is also, thankfully, one of the easiest to fix. If you’re a sole proprietor, you may think that it makes perfect sense to keep track of your personal finances along with your business ones. Even if you run a larger group, who wouldn’t agree that everything would be so much easier to keep track of if you just made all charges with the same card?

Your CPA, that’s who.

If you don’t already have a separate bank account (and credit cards) for your business and your personal life, stop what you’re doing and open them now. Not only does this make it easier to sort out transactions every quarter, but it also makes ongoing financial recording so much more straightforward as well. This is one decision you’ll definitely be happy you made when tax season rolls around yet again.

2. Create a Plan and Stick With It

Starting your own business isn’t something that happens on a whim. It’s not only ultimately a very personal decision but a strategic one, too. You had to think about the kind of business you wanted to start. You had to find the best location for it. You had to hire the best people, test your business model and more. You had to develop a solid, actionable plan not only for the rest of the year but for the next five, 10 or even 20 years down the line.

So why should your business finances be any different?

In order to keep your business finances in order, you need to create a plan that works for you and stick to it. Decide what charges are going to which cards. Figure out how to best reconcile client invoices, payment accounts and more. There isn’t necessarily a “one size fits all” answer to this solution, but when you DO find a system that works for you, the best thing you can do is hold your own feet to the fire and stick with it no matter what.

3. Not All Accounting Software Solutions Are Created Equally

Similarly, it's also important to understand that just because you’re looking at a piece of accounting software does not mean that you’re looking at the right software for YOUR particular business. Options such as QuickBooks, Xero, Freshbooks and more all have a lot in common — but they have just as many differences, too. Make a list of the important features you need to support the system you’ve created for yourself. Either do this on your own or sit down with a professional bookkeeper to come up with a list of requirements. Then, find the solution that best meets these needs so that you’re in a better position to service your own needs moving forward.

In the End

One of the most important things to understand is the idea that creating a plan to keep your business finances in order is one thing — actually following through with that plan is something else entirely. Remember that this is a road that you do not have to travel alone. By consulting the help of a professional now, you’re making more than just an investment in your long-term sanity — you're making a true investment in the future of your business as well. Being able to keep track of money coming into and going out of your business creates a solid foundation that you can use to make better, more informed decisions for your entire organization moving forward — and that's the type of benefit you just can’t put a price on.

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Mike Kilmer

Mike Kilmer

R. Michael Kilmer, CPA, CVA is a CPA based in Winchester, VA. Mike started Kilmer & Associates, CPA, P.C. in 1998 and understands the challenges of operating a business. He uses this real-life experience to assist clients with the opportunities and challenges that they face. In addition to possessing the expertise and technical skills required by the profession, he takes time to listen to clients concerns and communicates with straight talk in an understandable way. By combining technical expertise and real-life experiences, Mike is able to assist clients with solving their problems and complying with regulatory requirements.

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