If there is one aspect of running a business that many entrepreneurs regularly get wrong, it has to be with finance. There are lots of business owners who set up a company without any experience of running a company and managing its finances. So, being forced to take the reigns of some corporate funds can be daunting for quite a few people who decide to become self-employed and set up their own business.
It doesn’t always have to be tricky, though. If you read on, you will find out some of the crucial dos and don’ts of small business finance that can help you get through.
Do Hire An Accountant
It’s super important to find an accountant who can help you out with your new business and all of its related finances. If you are worried about costs, you can scale back the work that your accountant does so that they only do the critical and complicated stuff. You will be able to organize your own paperwork and generate w2 forms yourself if you want, to try to streamline your costs. Your accountant will then be able to use them for your tax return and all other bookkeeping needs.
With apps like Freshbooks, Quickbooks, and Wave giving your accountant access to your books is as simple as setting up an additional log in. These apps generally allow you to invite your accountant as a secured user with their own log in. That way they have secure access, but you also retain administrative rights to their account and can deny them access if needed, such as if you change accountants.
Don’t Mix Up Personal And Business Finances
One of the biggest mistakes that many first-time entrepreneurs make is that they tend to mix up their personal and business finances. This can make your bookkeeping extremely complicated, and it could cause problems when the time comes to file your taxes. If you have an accountant, then they should be able to give you a hand sorting things out, which will make it easier to keep both sets of finances separate.
One of the challenges that many new entrepreneurs face is creating a business checking account. For many, the minimum deposit required to open an account is prohibitive. If that’s the case for you, try using an online business bank. Azlo, for instance, is an online business bank designed specifically for small startups. It connects with Square and Stripe to allow you to get payments easily, offers a debit card, and lets you create invoices within the account. They provide a mobile app and desktop version to make it easy for you to manage your accounts on the go. The bank is backed by BBVA Compass bank adding an additional level of security for your deposits.
Do Think About Renting
If you only have a tiny budget for your company, you might struggle to try to raise funds needed to buy all the necessary equipment and tools that your company might need. Thankfully, there is one way you can make this cheaper - you just need to rent rather than buy. There are many rental companies now that offer various office equipment and devices at very reasonable prices. It will undoubtedly save you a lot compared to buying them outright. You might even want to look for a rent-to-buy program if you do eventually want to own your own equipment.
Don’t Wait Too Long Before Looking For Credit
There’s a good chance that you will need a business loan to help prop up your company once it starts running. Even though most entrepreneurs save up enough capital before they launch their business, they often find that they need a bit of extra capital behind them. Just remember that you should apply for your credit in plenty of time, or else you could end up struggling for money if the application process takes longer than you expected.
There are some services like Lendr that can offer you shorter turnaround time on financing. Kiva is also a great way to raise startup capital. They offer micro-loans that are financed by other entrepreneurs who receive a return on investment as you pay back your loan. Crowdfunding is also another alternative, if you choose not to or cannot get upfront credit. However, you should consider all your financing options carefully and discuss any decisions with your accountant and lawyer before proceeding. For a list of financial resources, click below to get access to my Ultimate Resource List that provides various forms of accounting and finances tools and resources for your small business.
Running a small business can be hard work, but at least these points should take some stress off the financial side, so you can focus on some other aspects of the company!
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