Poor finance management is one of the reasons most startups fail. Here are the important things you need to know about startup finance.
If you’re starting a new business, then you know how fun it can be. The problem is that it’s easy to get too excited and jump in without a plan. One of the common things to overlook is financing. Reports show that 82% of small businesses fail because they can’t manage cash flow properly. You’re putting your business at risk if you don’t manage your finances properly. There is a lot of advice out there on business finance, so it’s tough to know where to get started. This post will put you on the right path. Below are five startup finance tips that all new companies need to know.
1. Keep Business and Personal Finances Separate
If you have cash flow trouble with your business, then it may be tempting just to charge things to your personal cards. Don’t do this. You need to keep your business and personal accounts separate. When you mix expenses, it creates a headache when doing taxes and makes it harder to prove expenses.
2. Hire an Accountant
You probably want to save money since you’re running a startup. This makes it tempting to pinch pennies and do everything yourself. But when it comes to accounting, it pays to hire an expert. They will be able to help you manage your budget and save on taxes. You may even save money in the long run when you bring in someone that knows their stuff. Check out BranchRight.com for advice on improving your bottom line.
3. Get Payroll Sorted
If you have seed money, then it makes sense to bring in employees to get your company moving. But you can’t just wing it when you have to pay your staff. Get your payroll situation sorted before you bring on your first team member. You’ll need a way to pay them and a paystub generator to give your team everything they need.
4. Don’t Let Small Expenses Pile Up
It isn’t too hard to control yourself when it comes to large purchases. This isn’t the case when it comes to smaller buys. It’s easy to write off purchases that are a few dollars each. But if you do this a lot, you’ll end up using a large amount of your budget on things you don’t need. Budget for small items and don’t go past your limit.
5. Don’t Forget to Pay Your Taxes
If you’ve never run a business before, you’re probably used to paying your taxes once per year. You can’t do this as a business. You’re required to pay your taxes every quarter on your estimated profit. Make sure you keep enough money set aside to pay what you owe to the government.
It doesn’t take much for a startup company to fail. If you don’t get your startup finance under control, then you’re just asking for failure. Use the tips above to get started on the right path. Once you have your financing sorted you can get started on the rest of your business. Head back to our business section for ideas you can use to move forward.
More on this topic: 5 Tech Tools All Small Businesses Need