One of the biggest mistakes a small business owner can make is not properly setting up the financial operations of his company. Here are a few tips to make sure that your company is on the right track:
1. Your company must have a separate bank account. “Commingling” is the legal term for mixing personal and professional finances in the same bank account. Your company’s corporate form gives you personal liability protection, but if you mix personal money with business money, you can easily lose the protection. Make sure that you never use business accounts for personal expenses.
2. Hire an accountant. If you speak with any successful small businessman, he or she will undoubtedly give substantial credit for their success to either their accountant or bookkeeper. Since you are serious about making money and growing your business, you must have sound and solid financial advice at your fingertips. You will be too busy with the operations of your business to keep track of the fine detail required for accounting. Spend the money. Hire an accountant or bookkeeper. This can also help limit your legal liability in the future.
3. Make sure your taxes are filed correctly and paid on time. This may sound simple, but with the amount of time small businesses spend on operations and growth, often the back office particulars can get lost in the mix. One of the first to get lost is often taxes. An audit from the IRS or state agency can end a new small business. No matter how much it pains you, pay on time and in full.
4. Maintain a budget for the unknown. This is the business equivalent of saving for a rainy day. Especially if you are prone to lawsuits, and you don’t have protection through your insurance, having a budget for unknown future expenses and overages allows you flexibility and security.