Fiscal management is a major component of small business ownership.
Even if you outsource in this area, knowing the ins and outs of your company’s finances and being educated enough to double-check your ledgers will help ensure you always know the financial health of your business. This is especially important when it comes to paying taxes, managing a budget, and being prepared for unanticipated financial issues. Reconciled can help with your accounting and bookkeeping to help you avoid tax troubles.
There’s plenty to know about finances when it comes to running your own business. Aside from “learning as you go” there’s the option of taking online coursework in pursuit of a business degree. Getting an MBA through Western Governors University, for example, equips you with concepts and skills related to the intricacies of accounting, as well as next-level leadership and organizational principles. Advantages of learning online include cost and the convenience of taking coursework at your own pace and wherever and whenever you’d like, freeing you up to continue working.
Develop a Business Plan
A business plan is a roadmap for how your company operates. It prompts you to evaluate all financial elements of your company’s operations. Having this in place before you launch will help you anticipate all money-related issues. This can lessen the potential for surprise. While a business plan is a requirement of applying for funding, consider it an internal strategy for your company. You can reference and update it regularly as your business launches and expands.
Create An Organized Financial System
Bennett Thrasher notes that being organized about tax issues can help you avoid hassles and financial pitfalls when it comes time to file. It can be tricky to manage payroll. Especially if you use a mix of full-time and part-time staffers, freelancers, and independent contractors. It gets even more complex if you have some staffers who are benefits-eligible, and others who aren’t. A lot of tax laws change from one year to another. So, utilizing a payroll service platform that can automate some of the complexities can be helpful.
Keep Detailed Records
Tracking all expenditures can be a great help at tax time. It ensures you’re not overpaying, while also maximizing your eligible deductions. According to Bossitude, maintain records related to every cent that goes into the business. This will guide you when you file. It can also serve as a backup in the event you’re asked to provide proof of deductions in the form of an audit. Good record-keeping has another added benefit, and that’s ensuring you’re operating within your budget.
Anticipate Potential Problem Areas
Unexpected financial issues can be difficult for a small business to manage. For example, if you overestimate income, underestimate expenses, or miscalculate employee payroll, you can be hit with a significant tax bill. You’ll also be faced with an unbalanced operating budget. Cedr HR Solutions points out that you’ll also want to ensure you’re classifying employees correctly. If you don’t, you could be hit with back withholding and unemployment, and Social Security taxes. Self-auditing throughout the year can help you identify areas of concern before they get out of hand.
Create a Crisis Management Plan
There are a lot of events and circumstances that have the potential to create financial headaches for a small business. Having a crisis management plan in place gives you a blueprint for how to respond if something goes awry. Planning for things can help you avoid tax troubles. For example, what will you do if a major client leaves? How about if a key employee quits or takes an extended medical leave? What if you experience a natural disaster that disrupts operations? Or if you get audited or sued? Having a plan of action in place for different scenarios will help you prepare. It will also give you peace of mind that you’ll be able to handle whatever comes your way.
Ideally, a small business will operate with reserves to counter any unanticipated financial needs. But in reality, most small operations run on a tight budget. Managing your finances, with the help of a consultant, an accounting professional, or a highly integrated software program can help you cover a lot of key financial bases and avoid tax troubles. It also eases the process of filing your own business taxes online.
Chelsea Lamb of businesspop.net