When running a business, one of the most important pieces is making sure your finances are being managed correctly. If you don’t know how to manage business finances, it can lead to not knowing where your money is going within your company, being unaware of issues that have arisen in your finances, and even going as far as leaving your business damaged financially. However, having the right knowledge and the right people to work with can help make sure you are set up for success going forward.
If you’re looking for business finance tips, you’ve come to the right place. When it comes to how to manage business finances, there are some great tips that every business owner should know. It’s important to start off by understanding all the elements that go into organizing your finances. Once you have that understanding, you then have to weigh the pros and cons of keeping your financial handling in-house or hiring some outside help to make sure your records are up to date and accurate.
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Stabilize Your Company by Managing Its Finances
If you don’t know how to organize finances, it can cause some instability in various areas of your company. If you don’t know where your money is coming from, going to, or even how much you have, it’s hard to successfully run your business.
One of the biggest elements of organizing finances is bookkeeping. Bookkeeping is the act of keeping a record of every transaction that occurs in your business: sales, purchases, payments, and every other element that includes money-changing hands. Keeping these records thoroughly and accurately can help assure that you are well-versed in where your money is going. When you know what your current finances look like, you can begin planning for how you want them to look in the future.
If you don’t have experience managing business finances, you may consider hiring an experienced bookkeeper to handle your financial records. If you’re considering this route, it’s important to know all that bookkeeping and managing finances include. Having this knowledge will help you in making your decisions on how to better manage your business finances.
5 Ways to Better Manage Business Finances
Here are five ways you can manage business finances better for a more financially-stable and profitable company.
1. Use a Balance Sheet
A balance sheet is essentially a summary of all the financial transactions occurring in your company. These sheets give you a full view of where your company’s money is going. Using a balance sheet requires that you, or your bookkeeper, keep up with all receipts and records of transactions to keep your balance sheet up to date. A balance sheet will help you see where your money is going and will give you the first sign that there may be issues in certain areas of the budget.
2. Understand Your Cash Flow
Cash flow is the movement of money in your company. If you understand your cash flow, then you’re able to have a full picture of where your money is going and why it’s going there. Understanding these elements of your finances will allow you to see if there are areas that can be improved on.
3. Create a Profit and Loss Statement
A profit and loss statement shows your company’s revenues and expenses for a specified period. These statements allow you to see your net income or net profit for that term. These statements also let you see your profits and losses side by side, which will allow you to determine potential areas that need improvement. If you don’t have one of these statements, you may develop a false understanding of where your money is, which can lead to financial problems down the road.
4. Forecast
A forecast is an estimate of future financial outcomes. Creating a forecast involves creating a budget for any upcoming expenses, as well as an estimate of potential profits during that time period. While this may take up some time, it is important to develop. Having a forecast will help keep you from being surprised by upcoming financial requirements. By eliminating the element of surprise in your finances, you’re already well ahead of many other companies that may not develop a detailed forecast.
5. Hire a CPA or a Professional Bookkeeper
If all the elements of bookkeeping and business finances seem to be too much for you to handle, there’s no shame in hiring a professional. Hiring a professional bookkeeper or CPA will take your financial handlings away from being in-house. This in itself is a benefit because having your finances handled in-house may lead to poor record-keeping, which can lead you to not knowing where you truly stand financially.
Professional bookkeepers know a lot of business finance tips and will ensure that your finances are handled correctly. However, you want to make sure you hire someone who is experienced with bookkeeping, so you can be sure that you will receive both accurate and ethical assistance. Incorrect bookkeeping can lead to many financial hardships, including IRS fines, losing unnecessary money, or even losing your company in extreme cases.
Contact LLB for Expert CPA and Bookkeeping Services in the Las Vegas Valley
Financial records are important to any company’s success. Understanding the risks involved with not having updated and accurate bookkeeping should help you realize how important managing business finances is. If you’re uncomfortable with how to manage business finances, it’s highly recommended to hire a CPA or bookkeeping service. You will want to ensure you are hiring a reputable and experienced bookkeeper to handle your company’s finances, so you will receive a full and accurate breakdown of where your money is going.
Here at LLB, we offer professional, experienced, and supportive help with bookkeeping and a wide range of financial services. If you are considering hiring a CPA or bookkeeper for your company, our services are affordable, flexible, and guaranteed to help put your mind to ease about where your company stands financially. Call us at (702) 471-7223 to start getting professional business finance tips today!
