Being Smart About Business Expenses Makes for a Smart New Business Owner
Becoming a business owner for the first time is a learning curve. This time, you’re calling the shots, and if you hit a bump in the road, it’s up to you to figure out how to get over, under, around, or through it. One of the biggest things you’ll be tasked with is managing your business expenses. This means not only monitoring the money you make and spend but also staying on top of daily financial tracking and reports, keeping up with taxes, and determining what financial issues are as big of an issue as they might appear. If you’re a new business owner looking to make smart business moves, these financial tips will put you ahead of the curve.
Consider Launching Online First
Brick-and-mortar buildings aren’t going anywhere anytime soon, but utilities, maintenance, emergency repairs, and commercial property insurance are among the many expenses new business owners don’t think to prepare for. You’ll need to pay for staff as well, not to mention rent, interior fixtures, and point of sale tools. An e-commerce business removes the physical building and enables you to sell your products/services both locally and globally to customers with nothing more than a click of a button. An e-commerce business takes some know-how, so do some research online using free online guides and resources to learn about things like keyword research, SEO, and upselling. Once you see the success you’re looking for with your e-commerce business, you can think about making the transition to brick and mortar.
Track Expenses Daily
It’s crucial that you track business expenses daily. You’ll find that you’re much more financially aware when you know exactly how much you’re spending and where you’re over and/or under budget, not to mention how profitable your business truly is. Then, you can put a plan in place to fix any bad habits. You’ll be much more prepared for tax season and can better take advantage of tax breaks when you have all the right numbers and reports to hand over to your tax preparer.
All this being said, daily tracking is time-consuming, but thankfully there’s expense tracking software available to free up your time for more important business tasks. QuickBooks and Expensify are two you may have heard of, and both are nothing short of amazing. QuickBooks touts a real-time dashboard where you can track expenses, invoices, and receipts. Expensify is automated, which is a definite plus if you’re trying to get away from manual tracking. All software comes with pros and cons, so do some research, ask questions, and read reviews. If you need help running this software, you can hire a QuickBooks or Expensify freelancer from an online staffing agency.
Stay on Top of Those Taxes
Starting your own business comes with tax responsibilities, and there are several of them. It comes with plenty of deductions as well, but you have to stay financially organized to make tax season a breeze. For example, keep any and all receipts, asking for both a printed and electronic receipt if possible. The tracking software mentioned above makes it easy to keep all those receipts in one place with a quick snapshot. Make sure you’re logging deductions for travel and client acquisition too. If you’re a home business, you’ll need to keep other documents like your home insurance, utilities, and property taxes to claim the home office deduction. Simplify things even further by using a separate business bank account and credit card.
Work closely with an experienced bookkeeper or tax accountant at Dave’s Bookkeeping and Tax Service so that you can ensure you’re tracking and filing correctly. A professional will be a huge help if you have employees to manage since you have employee-related tax responsibilities too. You’ll have to withhold federal taxes from all your employees’ wages, in addition to withholding a portion of their Social Security and Medicare taxes (that you also pay a matching amount for). Plus, you have to fill out the notorious W-2 form for each employee too.
Delegate, Delegate, Delegate
One of the biggest ways you’re wasting money is by not delegating. Surely you can save money (and time) by doing it all yourself right? Wrong. You’re only one person, so do a task audit to determine what would be better off in the hands of someone else.
As you go through each one, consider the six Ts:
Tiny – Those tiny tasks take a short amount of time, but they add up very quickly.
Tedious – Mindless tasks that don’t require much (if any) skill are tedious and easily passed on to someone else.
Time-consuming – This is a big one. Some tasks take forever to complete no matter how hard you try. Even delegating a portion of it can save plenty of time.
Teachable – It’s hard to hand the reins over to someone else, but learn to let go. If you can easily teach someone else and free up time to tackle more important things, do it.
Terrible at – Some tasks just aren’t your forte. If you can’t do the job yourself, don’t stress. Hand it over to someone with the right set of skills.
Time-sensitive – It can seem as though everything is time-sensitive in the business world, and sometimes it is. To help relieve stress, pass some tasks to someone else. That way, you won’t feel the anxiety of the crunch.
When it comes to who to delegate to, the choice is ultimately yours. It could be an employee, business contact, freelancer, or even an app.
Running your own business is empowering, especially since you’re the one in the driver’s seat. However, this means you’re calling the shots when it comes to the business finances. Starting your business was a smart move, so ensure you’re making smart financial moves too.