What’s the most important part of being a business owner? Well, other than the satisfaction of a job well done? Getting paid! In our virtual accounting firm we work with our clients to help them put processes in place to assure they get paid for the goods and services they offer as well as mechanisms for tracking all expenses that lead to that income.

Money management is more important than marketing and building your team. Of course you’d expect an accountant to say that, but it’s still true. Here are my tops tips for managing your business’s money:

  1. Open a business bank account. Before you do that you will need to have a registered business name and an EIN (employer identification number). Always run business expenses through a designated business checking account. Establish a business credit card, too. In the beginning the credit card may have your personal name on it, but only charge business expenses on it and pay it from your business Picture4checking account. When you mix business and personal funds, the IRS calls that co-mingling. It’s a big red flag for them and could get you into serious trouble.
  2. Establish a relationship with your banker. You may need to borrow money someday, so it’s nice if you’re a real person to your banker and not just an account. If you’re having a mixer or open house, invite your banker. This could be your new best friend!
  3. Decide how your financial recordkeeping will be done and make sure it is done correctly. Many people think that if they know how to use QuickBooks they can do their own accounting. That is only true if you understand GAAP (generally accepted accounting principles) by which you must enter transactions into QuickBooks. This is one area you don’t want to mess up! As I said when I accepted the Greater Arizona Better Business Bureau Business Ethics award in 2011, “IRS guidelines are not suggestions!” You have to do it right!!
  4. Find a good CPA who specializes in small businesses that you like and trust. Trying to do business taxes is way different than doing your personal taxes! There are tax strategies your CPA can suggest to reduce your tax burden. That’s a good thing! A good CPA is worth his or her weight in gold!
  5. How will you accept payment from your clients? There are myriad choices: cash, checks, and credit or debit cards or through online payment portals such as PayPal. There are many options for taking credit card payments with an app on your cell phone or tablet. Along with knowing what kind of payments you will accept you also need to set your payment terms. Will you require payment upon delivery? Will a deposit be required before delivery? Payment upon receipt of the invoice? Payment within 30 days? This needs to be established up front and shared with your clients so there are no gray areas.

Are there any money management tips you wonder about? Just ask! We are here to serve.

 

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