Learning and understanding how to manage in flow and outflow of money is very critical for every entrepreneur. If you can’t manage money properly, your business will die eventually. You don’t have to go to the university to learn about accounting but you must understand the basics. These tips will help;
Separate your business and personal expenses.
Most new entrepreneurs merge their personal money with their business money when they start off. That can lead to a lot of confusion down the road when you’re dealing with a higher volume of cash. The easiest thing to do is be consistent from the get-go: use one bank account for business transactions and a separate one for personal spending.
Invest in accounting software
Accounting software like QuickBooks or FreshBooks helps small business owners track revenue and expenses, invoices and receipts, vendor and employee lists, all with the optional accompaniment of neat, colourful labels. Transaction sheets can even be uploaded straight from your bank accounts. Far superior to Excel, software like this helps you see what your company makes and spends at a glance, and it’s beneficial for determining your business outlook and tax obligations.
Make financial projections
Many entrepreneurs fail to put a number to the money they expect to make. Financial projections are an essential tool to help guide your business along a healthy growth path, and they imply a commitment to meet targets. Entrepreneurs should have a projected income every year, up to a five-year forecast with a minimum of three years. Income statements and budgets detailing things like staffing plans and equipment expenditures should also be included.
Hire an accountant
According to a recent Sage survey, only 23% of new businesses were likely to hire an accountant. Sure, accountants cost quite a bit of money, but they can save you money by organizing your cash flow and finding extra tax shelters. If you’re not yet ready to hire an accountant full time, you can consider outsourcing your accounting or use accounting apps like Accounteer.