Managing Small Business Finances Successfully: 7 Things You Must Know

7 Key Things Every Business Owner Needs For Successfully Managing Small Business Finances

Congratulations on your decision to take the leap and start your own business! Becoming a small business owner is exciting, but it can sometimes be overwhelming. From dealing with zoning regulations to writing a business plan, a lot goes into forming your own company. One of the most important aspects to pay attention to is the financial side. Here’s a rundown of essential financial information for every small business owner.

Business Plan

Your business plan will inform your financial plan and funding needs.

Every business owner must have a business plan. Some business plans are quite lengthy and detailed, while others summarize the most critical points in a page or two. Your business plan will establish the structure of your company, its mission, a market analysis, and financial projections.

Expect to spend some time crunching the numbers. For example, how much cash do you need to set up your business? Do you need to purchase inventory and equipment, lease an office space, or invest in a website or other advertising? What is your forecasted revenue?

Once you’ve written your business plan, you can figure out your financial plan—most notably, whether you need to raise or borrow capital and how much you’ll need.

Business Structure

You can choose from a range of business structures.

While writing your business plan, you’ll need to decide on your business structure. The legal structure of your business will affect your taxes and personal liability, so you may want to talk to a Certified Public Accountant (CPA). A CPA will evaluate your business venture and recommend an appropriate business structure for you. The most common business structures are as follows:

  • Sole proprietorship
  • Partnership
  • Limited liability company (LLC)
  • Corporation (C corp)
  • S corporation (S corp)

Business Identification

You’ll need identification for your small business.

By this point, you should have already settled on a name. Unless you use your own name as a sole proprietor, you must register your business name with the federal and state governments. Your business identification is significant for legal purposes and enables you to obtain your federal and state tax IDs. An employer identification number (EIN) is required to open a business bank account and file business tax returns. Depending on your state, you may be required to get a state tax ID, as well.

7 Essentials for Successfully Managing Small Business Finances

Business Bank Account and Credit Card

A business bank account is a must-have.

Every business — including sole proprietorships — must have a separate business bank account. It’s never good practice to mingle your personal finances with your business finances. Comingling personal and business finances creates opportunities for significant financial errors. Plus, without a business bank account, you’ll be unable to link your accounting and bookkeeping software to your bank account for effortless data transfer.

Spend a little time checking out the rates offered by banks in your area before choosing one. Then, use your EIN to open business checking and savings accounts. You’ll also likely want to apply for a business credit card that offers cash-back rewards that make the most sense for your type of business.

Payment Method(s)

Determine how your customers will pay you.

Next, you’ll need a way for your customers to pay you beyond cash and checks. Customers generally expect that most businesses will accept debit and credit cards. And you will need to set up a merchant account, sign up with a payment processor, and obtain one or more card readers to accept debit and credit card payments. You may also need a mobile card reader if you will travel to your customers (e.g., contractor or landscaper) and want to accept payment at the customer’s location.

Bookkeeping and Accounting System

You’ll need to establish an accounting and bookkeeping system, ideally with QuickBooks®.

Before you accept your first payment from your first customer, you should establish an accounting and bookkeeping system. (Although it’s possible to start with spreadsheets or old-fashioned shoebox receipt storage, setting up a proper bookkeeping system before you open for business is best.) Talk to a Certified QuickBooks®ProAdvisor about setting up QuickBooks®and customizing it to your business needs.

There are plenty of choices for accounting and bookkeeping software for small business owners, but QuickBooks®is widely considered the gold standard. QuickBooks®can link to your business bank account and automatically transfer data as business transactions occur.

Tax Responsibilities

Know your tax responsibilities and minimize your tax burden.

Your tax situation will depend in large part on your business structure. Your entity type will even affect the deadlines for filing your taxes. Filing taxes for a company is considerably different than filing a tax return for a W2 employee. You’ll need to sort through many documents, including payroll documents (if you have employees) and receipts. You’ll need to file tax forms you probably never filed before (e.g., a Schedule C for sole proprietors). You’ll also need to pay estimated quarterly taxes.

As you can see, taxes can get quite complicated when you’re a small business owner. To ensure you’re in full compliance and to minimize your tax burden, it’s best to partner with a CPA.

Keeping track of all of your financial data and minimizing your tax burden doesn’t have to be a time-consuming chore. Partner with Accounting Meister and our Certified QuickBooks®ProAdvisor and CPA will get you off on the right foot. Our ProAdvisor has delivered more than 3,000 hours of tutoring and training. Schedule an initial consultation with an accounting expert in our North Port, Florida office today.

Avatar for Scott Meister, CPA

Scott Meister, CPA

I help small businesses, accountants, bookkeepers, office managers, and business owners with their accounting needs. I’ve used QuickBooks since 2002 and train folks on how to use it efficiently. I create high-quality video training tutorials for QuickBooks and post them on scottmeister.teachable.com. Certifications include: Certified Public Accountant (CPA) | Certified Bookkeeper (CB) | Advanced Certified ProAdvisor for QuickBooks Desktop | Advanced Certified ProAdvisor for QuickBooks Online | Certified ProAdvisor for QuickBooks Enterprise | Certified ProAdvisor for QuickBooks Point Of Sale