Managing expenses is one of the hardest things for business owners. There are so many things to take care of, such as taxes, bills like rent and utilities, invoices to suppliers and vendors, salaries of employees and contract workers, unexpected expenses and so on. Managing your business expenses can become time-consuming, fast.
It’s hard enough for large companies to stay on top of their business expenses; much harder for small businesses. It’s no surprise that most companies have experienced missing a payment or making a mistake. Those late fees can add up quickly.
Follow these tips to prevent this from happening to you.
4 Tips for Managing Business Expenses
#1: Just don’t use cash.
While there’s situations and instances where you can pay with cash, it’s a slippery slope because it’s difficult to track cash purchases. Many small business experts suggest paying by cash for small purchases or when you don’t have any other option. Paying with your company credit card or debit card allows you to have a trackable history of your expenses. This helps build a paper trail, which you can use later for verifying payments or writing off business expenses when paying tax. Also, make use of credit as much as possible and make your payments on time, as this will help you build your FICO score. There are even certain applications(Quickbooks, Mint) which help sync all the expenses and make your life that much easier
#2: Don’t mix business and personal expenses.
As a small business owner, you should be very clear about what’s a business expense and a what’s a personal expense. Business expenses and personal expenses are completely different and should not be mixed. Not having a clear demarcation between business and personal expenses could lead to issues with the IRS. You might end up picking up the income tax liability for your business, which is the last thing you need.
#3: Automate your payments.
If you can automate your bill payments, go ahead and do it. This will ensure that you will not miss out on even a single payment by mistake. This way, you will be able to avoid late fees, improve your credit and manage overhead expenses better. But if you’re going to automate your payments, you will need to watch your checking account closely to prevent bouncing of payments or account overdrafts. The last thing you want is to deal with irate suppliers because of bounced checks. That could be really destructive for your business and even have a negative effect on your credit.
#4: Apply for a small business loan.
Every small business, at some point, will need to apply for a business loan. You will need a source of capital that you can depend on whenever needed, especially when times are tough. Also, taking out a small business loan from an alternative lender can help you manage your future business expenses more efficiently.
There are many lenders that offer small business loans to business owners such as yourself in quick time. Getting a quick injection of capital from the right lender could just be the push you need to grow your small business.
Being a small business owner definitely has it’s perks and downsides. Let us help you get a better grasp of your business with new equipment. One less thing to worry about when your equipment won’t break down.