Money Management Tips for New Business Owners

Owning a business is hard work. If you’re new to it, you’ll soon discover that there is much more to operating a business than opening the doors in the morning and taking money to the bank at night. Problems arise without warning and need to be handled without delay. In the midst of the turmoil you need to make sure the business runs smoothly and is profitable. It’s imperative that you manage money correctly. Following are a few money management tips for new business owners.

Keep Track of Your Money

Although you probably won’t be able to micro-manage your business, you should nevertheless keep track of your money. If you’re not familiar with accounting procedures, you should take a few classes on basic accounting. Set aside a time, either once a day or once a week, to take a look at the books and see where your money is going, and how much is coming in. If you are aware of a potential shortfall of cash ahead of time you can take steps to alleviate the situation before it gets out of hand. Knowing what your money is being spent on, i.e. material, wages, insurance payments, you can budget accordingly. Hiring a good, trustworthy accountant is important, and will take a lot of pressure off you, but you should still be aware of how the company’s money is being spent because it will help you determine what needs to be done to keep the business afloat. Being aware of the cash flow will allow you to plug a leak before it sinks the business.

Separate Your Personal and Business Money Matters

If you’re just starting out in the business world, you probably aren’t used to keeping one source of money separate from another, but you’ll save yourself a lot of headaches if you keep your personal money apart from your business money. A new business owner may be tempted to write a personal check to cover a business shortfall, but that would be a mistake. In order to make sure the business is operating at a profit it’s important to let the business pay for itself. If you need to take out a short-term loan to cover the shortfall, do so. When you’re starting a new business it’s important to not overspend, either in your personal life, or for business purposes. Instead you should try and keep a rein on spending until the business is operating at a healthy profit.

Professional Advice

Seeking the counsel of a professional money manager is always sound advice. Although you will have some out-of-pocket expense to pay for their time and talent, the cash you spend for professional advice is usually money well spent. A good accountant can save you a lot of money by keeping track of expenditures and suggesting where and how spending money will help you make more. A good tax attorney will be able to help you find ways of saving money on your taxes.

Paying Taxes

A good accountant and tax attorney can find ways of helping you manage your money, and save money wherever possible, but one thing you should make sure you do is pay your taxes on time. If you’re new to the business world you’ve probably had nothing more to do with the IRS than filling out a 1040 form and cashing a refund check. Owning your own business is a different story. Instead of cashing a refund check, you’ll be writing checks to the IRS. This is where the sound advice of a professional will be useful.

Lease Instead of Buy

One way to save money on business expenses is to lease whatever equipment you can instead of buying it. There could be tax advantages to doing this, as well as savings on the equipment itself. Leasing can actually save you money, especially on equipment that becomes outdated quickly, such as computers.

Listen to Your Peers

It may sound trite, but listening to your peers can help you manage your money better. If you join a local civic group such as the Rotary or the Kiwanis Club you will be surrounded by individuals that are active in the community. Some of those people are business people who have been where you are. Listen to what they have to say about their business practices and how they handle money. As you become friends you’ll learn little tricks of the trade that you can use in your day-to-day business operation.