Finances. It’s a scary word isn’t it? And, unless you’re starting up your own accounting firm, it’s likely an area you tend to avoid. As a creative professional myself, I’m often tempted to scream when I hear words like “budget,” “revenue,” and “expenses.” But, alas, organized finances are key for establishing and maintaining a booming business.
There’s no doubt about it—starting your own business is a challenging endeavor on its own. Factor in the added stress of staying on top of your cash flow, and you can quickly start to feel overwhelmed.
But, take a deep breath. Managing your startup’s finances doesn’t need to inspire a panic attack. There are plenty of great tools and resources out there that can transform you into a money management pro.
Today, we’ve teamed up with Square to share a few tips for getting your startup’s finances in order, so that you can spend more time focusing on the work that you love!
1. Set up an accounting system
In order to stay on top of your finances, you need to have a system in place to keep accurate track of them. So, needless to say, setting up an accounting procedure for your business is a crucial first step for getting your startup on the right track.
Before selecting your accounting platform, do some brainstorming to determine what exactly you need your system to do for you. Do you have employees and need to keep track of timesheets and payroll? What about accounts payable or aging invoices? Do you have to monitor inventory? You’ll also need something that will easily generate the exact reports you need for tax time (more on that later!).
Whether you end up using a customized Excel spreadsheet, advanced software, or a web-based application, do thorough research to determine what platform best suits both your needs and budget. Your accounting system is a key ingredient for managing your business finances, so you want to make sure to take the time to find something that works well for you.
2. Establish a banking relationship
Keeping all of your business-related expenses completely separate from your personal expenses will make your life a whole lot easier, especially when the dreaded tax time rolls around. So, head to a local bank and set up a business account for your startup.
At minimum, you’ll need to open up a business checking account and apply for a business credit card. Don’t be hasty when selecting your credit card! Take the time to look for something that offers a reward program that will benefit both you and your business. You can also order business checks at this time, if you think you’ll use those as another form of payment for your business expenses.
You’ll also want to designate someone you trust as a signatory on your business account. It seems morbid (and I’ll cross my fingers that you never need it) but it’s smart to think ahead and be prepared. The signatories on your account will be able to access your business’ finances, should anything ever happen to you.
With so much banking done online today, you may not need to visit the physical bank location on a regular basis. However, it’s still important to establish a banking relationship somewhere. Your business banker will be a valuable resource to answer any questions or address any issues you may come across. Think of them as your financial advocate of sorts. Plus, if you need to apply for a loan to cover startup costs, it definitely helps to have some history established and a relationship already in place!
Having a solid relationship can also help you with funding further down the line, should you ever need additional support to keep your business running. Whether you want to expand your office space, hire a new employee, or offer a new product—you’ll likely need money to make it happen. As an alternative, Square’s small business financing program, Square Capital, can also help out here.
3. Set your budget
Having a dream is one thing. But, you usually need a firm plan in place in order to make it a reality. In the case of your startup, a comprehensive budget is essential for ensuring the success of your business.
At their most basic form, business finances actually boil down to a pretty simple equation: you want more money coming in than going out. While this seems uncomplicated, it can actually be an incredibly challenging thing to achieve in the early stages of your business.
However, don’t get discouraged. Regardless of the current state of your finances, it’s important that you sit down and get a clear idea of your revenue and expenses. Take some time to plan out your budget in order to identify your breakeven point. Obviously, your goal is to eventually make money. But, starting a business isn’t easy or cheap! Start by figuring out what you need to make in order to keep your doors open.
Setting your budget is also the perfect time to determine your pricing structure. Whether you’re selling goods or services, you need to identify prices that are fair and competitive, while still maintaining the economic viability of your business. So, don’t work backwards. First determine your breakeven point, and then piece together your prices to ensure you can make that happen. If you have employees, you’ll also need to determine a pay structure that is reasonable for both of you.
Having a budget in place is also important for ensuring you can afford any capital needs you might have. Do you need to purchase a computer or a vehicle? Create a list of the kinds of supplies and equipment that is required to run your business, and make sure that those things appear in your budget!
Creating and maintaining a budget, as well as constantly keeping a watchful eye on your finances, can seem overwhelming. But, it’s nothing to tear your hair out over! Resources like the Square Analytics and Reporting tool make keeping tabs on your cash flow a breeze. Offering incredibly detailed analytics, you’ll not only get a clear view of what’s working and what isn’t when it comes to your sales and revenue, you’ll also get incredible insights into your customer’s behavior. That’s undeniably valuable information for continuing to grow and improve your business!
4. Enhance your revenue
Obviously, the biggest part of making your business successful is selling what you’re offering. Whether you make aromatherapy soap or you create custom stationery, making transactions simple for your customers will always help to grow your income.
Before jumping right in and accepting payments, it’s important to determine what forms of payment you’ll accept from your clients and customers. Will you only take checks and cash? Or, will you make customer payments easy by also accepting credit cards?
If you’re searching for a simple way to accept credit card payments, Square allows you to swipe all major credit cards at one flat rate. So, whether you’re at a farmer’s market or a client’s office, you can accept payment anytime, anywhere. Square also offers devices for accepting Apple Pay and chip cards, adding even more convenience for your customers.
5. Don’t forget about taxes
Undoubtedly, tax time is one of the most stressful times for any business owner. But, if you stay on top of things throughout the year, tax time won’t be as big of a headache. I can’t promise it will ever be painless—but staying organized will at least make it tolerable.
Paying taxes as a business owner feels much different than paying taxes as an employee. When taxes are automatically withdrawn from your paycheck, you don’t really actively think about them. It’s an “out of sight, out of mind” effect. But, when you need to sit down and cut a check to Uncle Sam every month or quarter, it can feel a lot more daunting.
First, sit down and do some research about your federal tax responsibilities, as well as the unique tax responsibilities in your state, so that you can avoid any nasty surprises down the line. The U.S. Small Business Administration provides a great resource for learning more about your specific tax obligations.
Next, make sure that you set aside some money every month in your budget, so that you’re financially prepared when it comes time to write a large check for taxes. Budgeting for taxes might seem counterintuitive. But, technically taxes are a business expense. So, it’s important that you plan for them!
6. Hit the ground running!
Once you’ve taken these steps to get your startup’s finances in order, you’re well on your way to running your own successful business. So, it’s time to hit the ground running and focus on the work you love!
As an entrepreneur and business owner, you’re always looking for new ways to expand and add to your business. Luckily, the resources don’t end once you’ve simply set up shop. There are plenty of options out there that will help you consistently add new offerings and assets.
Through Square, you can add new features to your business, like custom gift cards and an online store. After all, you never stop growing and evolving. Your business shouldn’t either.
This article was sponsored by Square, but all of the opinions within are those of The Everygirl editorial board.