Spring Clean your Small Business’ Finances

It would be a good idea for a small business owner to set aside a separate bank account dedicated to taxes, where monthly they deposit a certain amount dedicated to estimated taxes. Any smart small business owner knows that it is also very important to keep the businesses checking and credit account separate from personal accounts. This goes a long way towards ensuring that all financial records of business-related income and expenses are maintained accurately and correctly. It also helps one plan correctly when the time to file tax returns comes. Small business owners are also advised to seek out the services of a tax specialist especially when they are unsure of their estimated tax obligations. The specialist will give the best calculation method for the business. They will also help carefully track and maintain a record of earnings and deductions.

2.  Stay in the green.

There are two things that keep a business running; profits and available cash. Seeing as spring is a great time for business growth, business owners should take the necessary action to ensure that they are both profitable and that the business is maintaining a healthy cash flow. Cash flow should be checked weekly, as for profits, a business may be profitable but the profits may be stuck in accounts receivable. A lot of focus should be put on the timing of income and expenses as this helps to identify potential gaps in the business and help to plan ahead in a bid to determine how much cash will be needed to cover any potential financial challenges. Any business is bound to experience a period where it needs more cash than it currently has on hand. While spring cleaning it is important to consider if a business line of credit would help bridge and gaps a business would encounter in cash flow.  For example, when taxes are due one may want to use a line of credit to keep cash flow constant and cover ongoing expenses while still ensuring that tax debts are paid. The business owner should also create time to meet with bankers for a spring financial review that includes an assessment of credit needs. A banker will help the business owner know what the available credit options are and help choose the right credit option suited to the business. Going out to seek professional advice on the business is always a good idea as one is bound to receive good guidance on the business.

3.  Dust off your business plan.

Every small business should have a formally written business plan to help guide important business decisions and financial planning. Spring cleaning is the best time to go over the business plan, do a quick review and consider any important business updates that would reflect on the businesses current needs and goals. A business plan serves as a guide through the entire business cycle from start-up to succession planning. An effective plan helps business owners prioritize in how to spend their time and money effectively as well as set measurable goals for the business. It can also help anticipate and avoid any potential risks as one is aware of any potential current and future obstacles. A functional business plan is also a great way to help gain business financing. Some large business loans and lines of credit require the production of the businesses formal business plan before extending any credits.

Giving the business a thorough spring cleaning is not only refreshing but also a very productive and strategic task. By simply updating the business plan, managing cash flow, and organizing the businesses finances, the business is only bound to move forward with growth and success.

Featured Image: DepositPhotos/ Kris