When you decide to start your own small business, the financial side can be one of the most daunting aspects. Most people’s experience with a tax form is for their own personal taxes, which are usually less complex than anything you have to do for a business. However, navigating the world of taxes, business expenses, and finance as a small business owner isn’t as complicated as it seems and doesn’t have to involve spending a fortune on an accountant. You can also now connect with a tax expert or CPA on-demand from your own home in Denver or anywhere else in the States.
What Are Business Expenses?
Whether you have started a small business or have started going freelance, chances are you have business expenses. These are the costs associated with running your business, whether it be rent, transport, or a coffee with a client. These costs are tax-deductible, so be sure you keep track of them all so that you can claim them during tax season. There several tax deductions you can claim, including your retirement contribution or the running of a home office.
Many people pay someone to handle their business expenses, but this may not be necessary for a small business. Doing it yourself saves you money and is also a good way to develop financial management skills You can start by creating a spreadsheet to keep track of your income and expenses or use a free online template. If you decide you need software to assist with the process, consider shopping around to find a highly rated tool at an affordable price.
Staying on Top of Things
The worst thing you can do is leave all your tax work for tax season. Not only will this cause you undue stress, but it will keep you from developing a solid understanding of your finances, meaning you might be prone to overspending. In order to stay on top of your finances, there are some things you should be doing daily, weekly, or monthly.
- Daily – Input any expenses you have incurred during the day and file any receipts, either digitally or physically. This will save you so much stress down the road.
- Weekly – Remind yourself of any unpaid invoices, and mark down whether there are any deadlines in the upcoming week. This free guide to chasing invoices through emails shows you how to do this in a friendly, professional way.
- Monthly – Check in with your budget and goals for the period. Are your expenses on-budget? Are you saving enough money to cushion a bad cash flow? Do you need to push for more business? These are details to pay attention to on a monthly basis.
Doing this work regularly allows you to keep your expenses under control and save money, thus maximizing your profits.
Common Financial Problems
When it comes to financial emergencies, the best method is prevention. Stay on top of your expenses and income by regularly monitoring them on a spreadsheet or dedicated online system, and have an effective billing system and contingency plans for when a client isn’t paying. This guide to billing strategies by Inc has some great advice.
The vast majority of financial issues can be prevented with careful budgeting and tracking expenses. You need to focus on reducing your costs, not only to maximize profit but to keep you afloat if anything goes wrong. Look for creative ways to cut costs and save on office supplies and furniture. For example, you can use ebay coupons to find deals on supplies or buy energy-efficient equipment.
Of course, even when you prepare sometimes, things will go wrong. In these cases, don’t panic. There are plenty of resources for small business owners and freelancers which can help them out of a bad financial situation: this list by Small Biz Trends outlines just a few of them.
Managing finances as a small business owner is less about financial expertise and more about organization and discipline. As long as you regularly check in with your expenses, you will be able to save money, stay on top of taxes, and effectively grow your business. Start by scheduling time to track, check, and chase up financial matters in your diary, and keep these appointments you make with yourself — you’ll be managing your finances like a pro in no time.
More on this topic: Taxes, Revenue, and US Tech Companies