Manage Finances for Your Small Business

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Smart Ways to Manage Your Small Business Finances

Effective finance management is a primary necessity to run a successful business; however, for a small business it becomes even more crucial and demanding. Owing to limited budget and manpower small business need a well-planned finance management. Though effective finance management is absolutely imperative and needs an expert handling, still, there are some really easy and smart ways which can help in smart finance-management. For all the small business owners and budding entrepreneurs, here are the top 5 ways in which you can manage your finances smartly.

Consider Each Month As A Mini Year

Every fiscal year begins with financial goal setting for the coming 12 months. Chalk down S.M.A.R.T. goals which are Specific, Measurable, Attainable, Realistic and Time-sensitive. Have one annual goal but break it down into 12 small and digestible goals to make them easily accomplishable. Treat each of your month’s ends like a mini year; as you usually check all numbers by the end of the year, make it a practice to go through all the finances by the end of each month.

Try Your Hand At Cloud Accounting

Cloud-based accounting can act like a life-saver for many small businesses that find it hard to keep a track of their finances. Cloud accounting enables you to get real-time insights into your business finances anywhere, anytime and from any device. It also helps in eradicating any error-making from the finance inputs to ensure that your debit and credit numbers are in sync. Some of the best cloud-based accounting software are Xero, Freshbooks, Wave Accounting, QuickBooks, Kashoo, and Outright.

Keep Your Business And Personal Finances Sorted

While planning ahead for the business, many small businesses tend to commingle their personal and business funds. In order to streamline your business finances, it is important that you sort out your personal and business finances separately. Have a separate account along with credit card or checkbook dedicated for all your business finances. It not only ensures smooth management of the small business finances but also help you in handling all the taxes easily by the end of the year.

Get Help From Financial Professional

You can either hire a CFO or Chief Financial Officer or go with any experienced financial professional or accountant to manage your small business finances efficiently. A financial professional can share his/her expertise in checking your business finances to determine ways to maximize returns while minimizing any deductions. A person with experience in small business finances is recommended as he/she would know how to track down the business and advice on cash flow, tax returns, audits and other things.

Invest In A Good Documentation System

The old story of coming up with a shoebox full of receipts at the end of the year would come true in your case if you do not have a documentation system to maintain all your paperwork. You can take the old school way of keeping a manual paper filing system by stacking each piece of paper in dedicated files, folders, and cabinets. The coming of age, technologically advanced way to documentation is by replicating all the documents into the computer file systems which is later backed up on the cloud. Google Docs, Dropbox, and Hubdoc.com are the top clod-based systems for quick and safe back-up of all the finance transaction files.

While climbing up the hill of success to be at par with the big businesses at the top, a smart small business finance management acts like your climbing crampons to make your climb smooth and successful. Apart from having a vision, business acumen and referring to small business marketing guide, finance management is a borderline necessity for any small business. Manage your small business finances effectively using the smart ways discussed above. Try them with your small business and see all your business finances getting on the right track.

Accountancy 101: 5 Tips to Manage Your Small Business’s Finances

Being your own business’s accountant can be daunting, but it’s possible with some tric

Being your own boss, running your own company, the American dream – it’s not only a romantic notion, but also something that has wide-reaching benefits.

The allure of doing what you love and managing your own work life is something that draws in millions across the country. In the U.S. alone, there are nearly 28 million small businesses in operation. The majority of these are single-entity enterprises, consisting of only one entrepreneur running the entire operation. This means there are a lot of business owners out there doing everything themselves.

But, as with all good things in life, there are trade-offs. When it comes to running your own business, you have to take on a number of responsibilities that a traditional employee does not. One such responsibility is the management of your finances, a prospect that is enough to put anyone off the idea. Taking control of your business’s money can be an intimidating prospect, especially for those who wouldn’t class themselves as good with math. However, you don’t have to leave your dream of owning a business at the door just yet.

For those who struggle to keep on top of their business’s finances, or new business owners entering this exciting but complicated world, here are some expert tips to keep a firm and stable grasp on your business’s financial health.

1. Take time to understand all of your financial responsibilities.

So you’re running your own business. As such, you are responsible for managing your own money. But what exactly are your financial responsibilities? This completely depends on your circumstances, your business type and how large your company is. These are some common responsibilities:

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Tax – Tax is a given, but what kind of tax? If you have employees, your responsibilities will differ from those of a single-entity enterprise. Do your research and find out what your tax obligations are.

Repayments and reports – You may have stakeholders to answer to and investors to repay. Likewise for banks and other lenders. These types of people or firms will also require financial reports and evidence of growth and profitability.

Day-to-day operations – Day-to-day responsibilities of running a business’s financial accounts also require your attention. This includes bookkeeping and recording transactions, monitoring invoice payments, paying your own wages, dealing with suppliers, and budgeting.

Invest time in understanding the processes of each financial responsibility you have. You may have a few, or a lot, but be sure to be aware of each and every one. The result of such insight is that you won’t miss important tasks, thus minimizing the potential for mistakes.

2. Make an accounting schedule.

Any accountant will tell you that the key to good financial management is control. Losing control is when you start to miss things, when you start to make mistakes. So how do you maintain control? Keep things regimented and perform accounting tasks to a schedule.

Some might be tempted to do financial tasks as they come. Record transactions when they come in or send out invoice reminders when you remember. But this is a slippery slope. Something important comes up and you miss one item and you’re left scrambling to catch up – or you forget about it completely and your figures get skewed.

The best advice we can give is to create a time slot. Once a day, week, month – whatever works. During this time, you go over all financial tasks that have accumulated with the given period. Record all transactions, file all invoices, and produce all necessary documentation. If you keep things on a clear and manageable pattern, you’ll find it becomes a lot more difficult to become overwhelmed.

Financial accountants are like a wild animal – you just need to know how to tame them.

3. Use accounting software.

You’re not an accountant, but that doesn’t mean you can’t use their tools of the trade.

Common practice for business owners running a small enterprise is to manage their financial accounts through basic spreadsheets like Excel, but this software isn’t designed to support your accounting processes. There are plenty out there that do, though. You’ll find countless examples of accounting software, such as Xero or QuickBooks, which have features to make your financial management easier. This includes scheduling and reminders, monitoring for capital gains, invoice procedures, separation of accounts between incomings and outgoings, and the ability to apply filters to your financial records to establish different kinds of data and reports.

Editor’s Note: Looking for accounting software? We can help you choose the one that’s right for you. Use the questionnaire below to have our sister site, BuyerZone, provide you with information from a variety of vendors for free:

Establishing your financial data within specialized accounting software, instead of a basic spreadsheet system, might seem like it will overcomplicate things, but once you take the time to understand how the software works, it will make managing your business’s money a whole lot easier.

4. Take onboard expert advice.

No, this article isn’t incredibly meta and self-referential, although it does make my point nicely.

Reading, listening and learning about how to manage your company’s money better is only going to do one thing: help you manage your company’s money better. Expert influence from those in the accounting field, or business owners who have been in your situation before and conquered that financial mountain, is worth the investment of your time.

There are countless resources available to help you learn how to be better at accounting. Articles will always pop up that provide new tidbits and insight into the world of money management and sound accounting practices. Often just reiterating some much-needed basics, but sometimes providing new techniques and education for SME owners on tools of the trade, this type of content is invaluable to a business owner who wants to improve on their accountancy skills. If you don’t want to spend your life reading article after article about accounting, though, consider subscribing to podcasts or even attending talks and events.

It may take years of education and a handful of qualifications to become an accredited, professional accountant, but that doesn’t mean you can’t educate yourself to be your own mini-expert.

5. Know when to get help.

Stubbornness is, unfortunately, a trait many business owners share. It’s a good trait to have in some circumstances. It helps you stick to your guns and build the vision you’ve always dreamed of, but stubbornness can also have its pitfalls. When facing issues with accountancy and finance management, it can be difficult to let go and not only get somebody else involved, but also admit defeat. However, sometimes is it simply necessary for company survival to bite the bullet and get support from a professional, such as a chartered accountant.

But when should you make that important call? Here are some examples of times where help is recommended:

You’ve lost control of your figures.

You are facing an audit.

You are losing too much time to account management.

You keep making mistakes.

You’re simply out of your depth.

You are experiencing rapid growth.

Don’t let your business sink because your money isn’t being managed properly. Accountancy 101: you can’t always be your own accountant.

8 Small Business Accounting Tools to Help You Manage Your Finances

Accounting can be a time-consuming chore for small business owners, but a necessary one in order to track, manage, and optimize your business’ growth over time.

Sooner or later (and the sooner, the better), you’ll need to invest in a small business accounting software and system to manage your cash flow and prepare for tax time.

From bookkeeping to invoicing to tracking expenses, there are a lot of different things to consider when choosing the right software for your needs—and it’s an important choice, because it can seriously simplify your small business finances.

That’s why we’ve put together this list of popular small business accounting tools and Shopify apps to help you pick the right accounting system for you. Looking for help with product design instead? Check out our list of the best prototyping tools .

Choosing Accounting Software For Your Small Business

1. Quickbooks Online

Intuit Quickbooks Online is considered the standard when it comes to small business accounting and bookkeeping software, offering many of the features and bookkeeping functionality most types of businesses need with the added benefit that your accountant is probably already familiar with it.

Quickbooks makes it easy to select and pay for the features you need for your specific purposes, from:

  • Invoicing
  • Payroll
  • Managing bills from vendors and suppliers.
  • Expense tracking (including the ability to snap and save receipts through the app)
  • Inventory tracking

By connecting your bank account to Quickbooks Online, your account activity gets downloaded and categorized in Quickbooks, saving you the time it would take to reconcile and compare your records with your actual account activity.

You can take Quickbooks online for a test drive with a mock business to see it in action.

Price: $15 to $40 per month

2. Freshbooks

Freshbooks is a popular invoicing solution with built-in expense management and time-tracking features, as well as the ability to accept payments from clients.

Naturally, this makes it great for freelancers, agencies, and other service-based businesses with the ability to automate late payment reminders to customers, manage your different clients and projects with pricing that’s based on the number of active clients you have at a time.

Freshbooks is known for being user-friendly and providing stellar customer support when you need it, and is an easy choice if you sell services rather than products.

Price: $15 to $50 per month

3. Xero

Xero offers a wide breadth of accounting tools that include everything from bookkeeping to paperless expense management and the ability to get paid in over 160 currencies with automatic conversions and exchange rates updated hourly.

Xero lets you send invoices and quotes, as well as automatically reconcile your accounts, as you’d expect from a good accounting software. But the availability of inventory tracking and the ability to make purchase orders to your supplier on affordable plans makes it a good option if you are selling products online or offline.

Xero also offers you a directory of “Xero Champions” to work with—accountants and bookkeepers that specialize in different industries from retail to wholesale to professional services and more.

Price: $9 to $70 per month

4. Zoho Books

Zoho Books is part of the Zoho collection of business software that also includes a CRM, help desk and, in this case, bookkeeping applications. So if you are already using or plan to use other Zoho tools, particularly their CRM, it might make sense to use their business finance software too.

You get most of the features you’d come to expect from a bookkeeping software, plus time-tracking and other features that are perfect for selling services and not just products.

Price: $9 to $29 per month

Accounting Apps For Your Shopify Store

If you are a Shopify merchant, you might be manually copying over sales and customer data from your store to another bookkeeping software or a spreadsheet.

However, there are apps that can automate the flow of data, give you access to important inventory, financial, and customer data, and free up time that you can then spend growing your business.

5. Connector Apps

Getting your various software solutions to “speak” to one another can save you a lot of time and help you automate the transfer of data from one application to another or from you to one of your business partners.

That’s where “connectors” or integration apps come in.

The following connector apps let you seamlessly export product, payment, tax, and customer data with a single click, saving you from the monotony of manual data entry.

There are connector apps for:

  • Xero ($5 a month)
  • Quickbooks (Free)
  • Zapier (Free to $125 a month depending on your usage)
  • OneSaaS ($29 to $99 a month, depending on the volume of your business).

Integration cloud solutions like Zapier and OneSaaS offer a good alternative if you’re stumped to find a way to connect your different software or automatically update data in your spreadsheets.

Learn More: Use these free business card makers to help promote your business.

6. SimplyCost

Without accounting for the cost of goods sold (COGS), you won’t be able to track the real profit you net from each sale or the true value of your inventory.

SimplyCost is a simple and affordable Shopify app that lets you generate profit-based reports based on cost of goods sold.

You can set the cost of your goods for specific variants and even time frames within your sales history to paint an accurate picture of your actual profit.

Price: $4.99 per month

7. Profiteer

Profiteer is another Shopify app that can help track COGS of your products and variants. It doesn’t integrate with accounting software directly but you can export a CSV report that shows the total cost of your inventory or even profits within a certain time frame.

You can even apply your cost pricing to your previous sales history.

It accounts for currency fluctuations as well, so that you have an accurate idea of your true profit at any given time if you don’t sell in USD.

Price: $15 to $30 per month

8. Xporter Data Export Tool

Xporter isn’t an accounting tool specifically, but it is a great way to create almost any kind of report you want by exporting your store’s data into an Excel file. It can also give you data and fields that you wouldn’t have access to in your store by default.

You can automate these reports to be emailed to yourself, your supplier, your accountant or anyone else who’s involved with your business on an ongoing basis.

In the words of one user:

“This app helps me generate reports any which way that I like. By date, country, fulfilled or not, product, and so much more. It is 100% customizable. I can use the Excel file (or CSV) to send to my supplier, or use reports for my own benefit.”

Price: $7 to $45 per month

Find an Accounting System That Works For You

Factors ranging from the size of your business, your industry, your employees, whether you sell products or services or both, among others, are important to consider when choosing an accounting system that works for your business and your budget.

If you don’t need all the extra features, such as payroll management, then you can choose a simpler solution that gets the job done. On the flip side, you might also want to consider software that’s able to scale with your business as you plan for growth.

As always, when investing in any software as part of your business’ technology ecosystem, it’s important to do your due diligence and know exactly what you’re paying for.

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About the author

Braveen Kumar is part of the content team at Shopify where he develops resources to help aspiring entrepreneurs start and grow their own businesses.

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