Tracking your money is important. This is true in your personal life and it is especially true in your professional life. As an entrepreneur or small business owner, it is your responsibility to know where every last cent you earn comes from and where it goes. Properly tracking your money and making sure that your finances are in order is how you make sure that your company survives.
You know this already, of course. You know that the money is what makes your project a company and not just a very time consuming hobby. What you might not know, though, is what to track or how to track it. Here are some hints to help you with that.
Set Up A System
Organization is key when dealing with your company’s finances. Unlike your personal money, which you can get away with monitoring on a weekly or a monthly basis, your company’s money needs to be monitored every day. Create space in your office for things like receipts from vendors, invoices clients have paid, etc. Then, once a day, put all of those numbers into your accounting system and file your receipts and invoices appropriately. Make sure the numbers match up properly.
Receipt Hacks
As soon as you get a receipt for anything, write down the amount you spent, the date and the name of the vendor on that same receipt in ballpoint ink. This is very important because most receipts are printed with evaporable ink, which means that in a few weeks, all you’ll have is a blank piece of paper. This could become a huge problem at tax time when you’re matching up receipts with notes in your financial logs.
It’s also a good idea to invest in a good receipt scanner. There are apps for this that you can download right into your phone. As soon as you are handed your receipt, scan it into your cloud server so that, later, you will be able to print out a copy on request.
Payroll
Paying employees is more complicated than simply cutting them a check and then noting the check amount on your spreadsheet (or putting it into your accounting software; this is the 21st century). Employee wages need to be taxed in a variety of ways and it is your responsibility to make sure that those taxes are deducted correctly, tracked correctly and–most importantly–paid to the IRS correctly and on time. As the Accounting Taxes Payroll Partners blog notes, there are severe penalties for failing to process your payroll taxes properly.
Don’t Shirk Your Tax Responsibilities
A lot of entrepreneurs and small business owners are afraid of doing their taxes and choose to simply file their business taxes the way they file their personal taxes: once a year. This is wrong! Businesses are required to make estimated tax payments based on how much they’ve earned. There are huge penalties for failing to make these payments. Plus, if your company’s taxes are even a little bit off, you can count on being audited. Being audited is nobody’s idea of a good time.
Know When to Ask For Help
Here’s the truth: if you are running your business all by yourself and out of your spare room, you might be able to track all of your company’s money yourself, using a simple spreadsheet. It is better, though, to hire a professional to help you. Accountants are great for things like helping you keep your professional and personal finances separate. They can also help you manage any payroll issues you might have and make sure your own taxes are paid properly. Plus, when you let a professional manage your money, you are freed up to do other things: like market your product, come up with new projects and grow your business.
The bottom line is you have to take your money seriously. If you aren’t good with numbers or details, it is in your best interest to bring in someone who is.
