Finances are not always easy, and it’s normal for a small business to struggle at some point, especially in their first year. In fact, the first year is generally considered the most difficult, with many small businesses not making it past those crucial months.
To beat the odds, you don’t just need a good business idea or skills, you also need to be able to avoid your financial struggles. Here’s some tips to help you avoid the typical financial pitfalls for any small business.
Watch Your Banking
When you’re starting out as a small business, it’s not uncommon for banks to try and lure you in with fancy accounts that come with a lot of benefits. Always read the fine print, especially with bank accounts, and make sure that you aren’t going to be paying unexpected bank fees or that an overdraft won’t come at a price. Some accounts even cost money to keep open. Also make sure to check whether the benefits will come in hand or be totally unnecessary.
They might have lots of fancy tricks, but will they prove useful in the first year or can they wait until you have more stability?
Use Accounting Software
Accountants are expensive, and as a small business, you cannot necessarily afford one. Accounting software is the next best thing and many do an amazing job of keeping your expenses organizing and managed. Many programs are made specifically for the less accounting-savvy business owners, so look through your options and figure out which software will make the entire process of running your business and filing your taxes an easier one.
You have several options to choose from, as some software is downloaded onto your computer while others use cloud-based systems for smoother and more modern running and access.
Track Your Expenses
Always keep track of the ins and outs of your finances. If you fail to keep an eye on where things are going, your business will fail faster than the average statistic. There are loads of things that come under expenses, and you will find a quick list below with some examples:
- Advertising
- Marketing
- Accounting software
- Rent/bills
- Office supplies
- Legal fees
- Salaries
- Essential technology
- Business lunches
If you stay on top of everything and combine this step with the accounting software, you should be placing yourself and your business in safe waters.
File Your Taxes Correctly
Many small businesses make the big mistake of not taking the time to make sure they have filed their taxes correctly. This leads to penalties and fines as well as a long talk with the tax office about where you went wrong. It causes more stress than it’s worth, so just make sure your taxes are filed correctly in the first place.
If you’re ever in doubt, spend the extra dough and hire and tax adviser to help you out. This investment will most likely save you bundles of stress and money down the road.
To Conclude
Running a business can be an exhilarating experience but also a scary one. However, you won’t be in the failed percentage if you take charge of your finances from the moment you get started.
Watch your finances, stay on track, and make sure you do everything by the book. This is how you’ll achieve success, and with these steps, there is every chance that you can make it to your second year.