If you’re running a new business, you inevitably have a lot going on. Let’s say you’re running a home service business—you’re visiting client sites, following up on quotes, scheduling your team, and completing work. That’s a lot to deal with!
With all the hats you wear as a business owner, it can be a challenge to take a step back and get out of the day-to-day. But taking a step back is important. Make sure that you’re making time for yourself to think big picture about your company’s financial data and health.
Not sure where to begin? You’re not alone—and that’s okay. Get started with these 3 tips and you’ll set yourself up for success.
1. Consider hiring an accounting professional
You likely didn’t go into business for yourself because you want to prepare financial statements and look at spreadsheets. If you agree with this statement, consider hiring an accounting professional.
One of the main benefits of outsourcing your accounting, bookkeeping, and tax preparation is that it lets you focus on the things that produce revenue for your company. When you’re not focusing on accounting and bookkeeping, your time is freed up to improve your service offering, impress your clients, and reach new customers.
Accounting professionals can also help you understand the financial health of your company.
An accountant looks at a company’s financial big picture. They analyze and interpret data, compile reports and financial statements, and prepare taxes.
A bookkeeper, on the other hand, handles the day-to-day financial transactions. Because they are heavily involved in the day-to-day finances of your business, they can provide more immediate financial advice, as well as provide you with reporting to help you with your decision making.
2. Prepare financial statements
Eighty-two percent of business failures are because of poor cash management, so if you think financial statements are something only big companies had to think about, think again.
Financial statements will help you stay on top of your cash management. Common financial statements include a balance sheet, income statement, and cash flow statement. All together, they give a clear picture of your revenue, expenses, assets, and liabilities—and you can check out Investopedia for a deeper dive into each.
Building off our first tip, if you don’t know how or don’t have to the time to produce your financial statements, this is something an accounting professional can help you out with.
If you work yourself to the bone every month only to barely break even, there’s something fundamentally wrong with your business operations. Financial statements help detect these issues before they become a big problem.
3. Get a business bank account
Do you need a business bank account? The short answer is yes, but let’s unpack this answer a bit.
As a starting point, a business banking account makes your business look legitimate. Optics matter and first impressions are especially important when you’re trying to find and keep new customers.
Secondly, there are tax implications for using your personal bank account for business. Let’s say you choose to use your personal checking account for business transactions. Not only are you receiving income to this account, you’re making business expenses as well.
Everything from purchasing materials to putting gas in your car for a business trip to taking potential clients out for lunch is a business expense that you will want to claim as deductions come tax time. This can get very messy very quickly. When you have a business bank account, your records are much cleaner and this will make your life much easier at tax time.
Being busy is a good problem to have when you’re running a new business, but don’t forget to occasionally get out of the day-to-day to assess the big picture. Enlist the help of experts, prepare financial statements, and make sure you have a business bank account—these steps will help ensure you’re set up for success.
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