Operating a small business requires hands-on attention to every aspect of operations. The budget, in particular, should be monitored and adjusted for evolving economic conditions. If you have limited experience in dealing with company finances, here are a few tips to gain a better understanding of your business finances.
Monitor The Monthly Budget:
If you don’t already have a financial spreadsheet for your company’s income and expenses, establish one now that includes line items for every income stream and expenditure. You may want to invest in cloud accounting software that will simplify and streamline the budgeting process. Make a point of reviewing this financial report in detail each month and look for changes that may require immediate action.
Consult With A Licensed Accountant:
If you don’t want to hire a part-time accountant to handle the company’s finances, you can schedule quarterly or annual appointments with an accountant to go over the financial records. The accountant can explain the intricacies of the company’s financial operations as well as recommend changes to recordkeeping that may be helpful in facilitating financial oversight. The accountant may also be able to suggest improvements to your company budget and financial dealings to reduce costs or improve cash flow.
Some small companies hire an accountant with a retainer fee to be on standby as needed for questions or problems. This might be a good idea if your company is just starting up or if you expect major financial changes in the coming year.
Review Tax Preparation Documents:
Many small business owners pay an accountant or tax expert to prepare tax filings each year. The professionals often file tax returns and send copies to the company owner. However, it is important to carefully review the filings to ensure accuracy. Contact the tax preparer with any questions. If a potential discrepancy is noted, you may be able to get a free second opinion from some accountancy firms that offer that option. Your tax filings provide a snapshot of the company’s annual financials, so take a good look each year as a follow-up to monthly reviews of the operating budget.
Assemble An Accountability Team:
A small business owner may want to organize an accountability partner or mentor for advice and guidance on financial oversight. This might be a mentor or a local community professional in a similar business who is willing to meet occasionally to answer questions and offer suggestions. A board of directors is another option, although many small companies do not feel the need for this type of formal structure. It depends on your comfort level with the company’s financials and your personal understanding of how the budget should work.
Every business owner needs to monitor their company’s finances. Help is available through various sources like those above. Keep your business in good financial condition by monitoring financial transactions frequently and accurately.