Unless you are running your own accounting or financial advice business then finances can be a chore when it comes to managing your business. However, staying on top of your finances is a critical part of successfully running a business and how well you do it could be the make or break of your business.
From managing your cash flow, to ensuring you pay taxes on time and in the correct format, there’s a lot to think about on top of the everyday workings of running a business. However, don’t let that put you off beginning your own business as with some simple management habits, you can easily keep on top of your business finances and be on your way to success, Below, we’ll take a look at how you can manage your businesses finances to stay on a path of success.
Paying workers
If you have workers in your business that are paid on either a part-time or full-time basis then the chances are you are using some kind of software to stay on top of their hours worked and how much you owe them.
It’s also important to note that there are certain IRS tax forms you must submit if you are a business that pays workers. These forms are 1099 and 1096 and must be submitted in a timely manner every year.
Form 1099 is not required in all states, however in the states where it is required, you must submit the form if you pay workers more than $600 in a year. While this form is the more technical one to fill out, form 1096 is the supporting document that summarizes the information you are sending to the IRS.
If in doubt, it is best to use a company or software to help you fill out these forms as any mistake you make could be both timely and costly to your business.
Paying yourself
When it comes to running a business, there are two ways to operate. You can either work on a self-employed basis and use all of your earnings as a form of income, or you can list yourself as an employee within your small business and pay yourself a salary.
Which option you choose will depend on how big your business is and how much you make each year. There are many costs associated with running a registered business, from taxes to registration fees and liability insurance to name a few costs. However, as a self-employed person, taxes can often be a lot kinder and there’s no need to separate your cash flow and your pay to yourself.
Financing your business
When it comes to starting up your business, you don’t need to already have a huge sum of money. There are many ways to fund a business and which option you decide will depend entirely on your personal circumstances and preferences. Let’s take a look at these options below.
- Startup loans – These loans are backed by the government and offer easier approvals and larger loan limits. Borrowers can be eligible for up to $5 million.
- Preferred shares – Exercise caution with this method of funding as preferred loans give the holder a higher claim to dividends or asset distribution than common stockholders.
- Lease financing – Lease financing means a finance company is typically the legal owner of the asset for the duration of the lease.
- Business loans – As one of the most well-known options, a small business loan is a type of commercial financing qualified businesses can get from traditional banks, online lenders and credit unions.
Overall, when it comes to running the financial side of your business, there can be a lot to consider and stay on top of. However, by utilizing free financial advice services available to you and investing in tech savvy software that takes the hard work out of staying on top of the numbers, you’ll be sure to thrive and be able to focus on what really matters in your business rather than permanently number crunching.
