If you own a small business, chances are you deal with financial issues every day. There are many things that go into running a business and your financials should not have to be one of the things that causes you stress. Here are some tips to help you organize your business financials.
- Talk to your CPA. Talking with your CPA can raise awareness to some issues you weren’t aware of and help you see where you stand. They can also help you set forth a clear and concise plan for future financial issues.
- Re-evaluate your business entity. Many small businesses start out as sole proprietorships or partnerships, but then eventually transition to another entity as they grow. For example, if your business is not incorporated, you may want to consider incorporating (or forming an LLC) to shelter you from some financial risk and possibly save money on taxes. Failing to adjust your business entity for your revenue can be a costly mistake. Discuss the different legal entities with your CPA, so you can determine the right entity for your situation and the right time to make the change.
- Review your estimated tax payments from the previous year. Assess your estimated tax payments to avoid having to dole out underpayment penalties next year. Likewise, there’s no reason to overpay with your estimated payments; interest rates may be low, but there’s still better things your business could be doing with that money.
- Separate Business and Personal Finances. If you haven’t done so already, take the steps to keep your personal finances and expenses separate from those of your business. This is mandatory if your business is an LLC or Corporation, but it’s good practice for sole proprietors as well. This means you might want to open a business credit card and save your receipts and possibly opening a business checking or savings account. Having the separate account and saving a portion of your earnings in it can help alleviate the stress come tax time.
Please let us know in a comment below if you found any of these tips helpful and make sure to check out our website for more ways our CPAs can help you on your road to success.
Cited article: http://mashable.com/2012/05/01/tips-small-business-finances/