Best practices for your business finances

As a business owner there are many things you can do to ensure you are following best practices with your finances. However, many entrepreneurs do not keep track of their finances. Often times bookkeeping is the last thing a business owner will take care of in their business, yet it is one of the most important pieces of your business. And whether they know it or not, this could mean missing out on opportunities to minimize expenses and maximize profits.

Here are just a few things you can do to follow best practices.

Know your numbers: The number one thing every business owner can and should be doing is familiarize themselves with their financial statements. Your financial statements tell you how well your business is doing. Learn what the numbers mean and how they affect your business. This helps you to project where your business is headed to make more informed decisions for your business. Your financials also give you a snapshot of your business and let you know what service or product offerings are making you money.

Keep your business and personal expenses separated: Mixing your personal and business finances will inevitably result in confusion. It might seem convenient to charge everything to a single card, but ultimately this will make tracking your spending far more complicated than it needs to be. Begin by opening separate bank and credit card accounts for your business. For the on-going tracking and measuring of your finances, and for tax purposes, this practice will take a major headache out of sorting your transactions every quarter, or every year as the case may be.

Budget: Many business owners view budgeting as dull and unnecessary, but the importance of a budget could be equated with the value of a well-formed business plan. A budget is not a tool for planning out how every penny should be spent. Rather, it's a framework that you can use to help you make clear-headed decisions, whether it's increasing your marketing spend, or cutting expansion costs to keep your profits on track.

Plan ahead: Monitoring your finances and projecting future revenue and expenses will enable you to make better long-term decisions for your business. Without this information, planning ahead can prove challenging. If you aren't looking at the future of your business, you could be taken by surprise. If you want to get ahead and stay ahead of the competition, you should plan as much as 10 years in advance. You will be able to mitigate unwanted surprises if you stay ahead of the ball. Even if unexpected expenses do rise, if you've been practicing conservatism in your spending, you shouldn't run into any major problems.

Pay your bills on time: By paying your bills when they are due, you are ensuring the bill gets paid in a timely fashion without incurring the additional costs of late price fees.

Understand your tax requirements: Along with getting your books in order, understanding and fulfilling tax requirements should be a priority in your business financial management. The consequences for failing to file your business taxes are severe and could even result in criminal charges. Though dealing with SARS can be intimidating, this isn’t something you can ignore.

Many entrepreneurs have a tendency to try to handle everything themselves. But as with legal matters, the granular elements of small-business accounting aren't usually within a business owner's wheelhouse. Although it's easy to balk at the expense of working with a bookkeeper, they will be able to help you save money over the long haul. You'll be freed up to work on high value tasks that keep the business moving forward, while your bookkeeper handles the tedium of number crunching.

If managing your own finances is starting to get on your nerves, perhaps it's time to look into hiring a bookkeeper!