Many owners of small businesses are in a habit of doing mental calculations and they even don’t keep any record of it. This practice offers them a number of advantages including no fear of a system crash and thus loss of important information, no requirements for system up-gradation and having the convenience of tweaking their budget as often as they like without having to change the data fed on their systems. However, for wholesale suppliers, mental calculation is not possible because their business involves bigger and multiple transactions so they cannot store everything in their mind.
Getting a better control on your money can help you make, pursue and achieve long-term business goals, level out your seasonal ups and downs of cash flow as well as improve your profit ratios. Discussed hereunder are some finance management tips for entrepreneurs.
See your Major Expenses
Acknowledging major expenses in advance is something that many entrepreneurs are reluctant to do, perhaps because they do not want to acknowledge their seasonal ups and downs in advance. Experts suggest putting events like warehouse upgrading, replacing manufacturing unit components, replacing wholesale products lots or machines overhauling on the calendar a year or several months in advance. It helps you manage your business expenditure and not let you scramble for loan when such expenses become unavoidable. With such notes in place, you can know what’s coming ahead and have plans in place to fix it.
Track down your Major Expenses
As an entrepreneur, you must track down your business expenses otherwise you might miss some tax write-offs and end up making extra payments. You must have a computerized data to categorize expenses so that you can clear the cash disbursements which are related to certain business activities. It will help you not fret later about a particular expense. Experts also suggest that you must have a habit of jotting down other business expenses including the amount spent on official trips, lunches, coffee catch ups and other events with cash disbursements in your system.
Record your Deposits
No entrepreneur wants to pay additional tax on money that is not income. Therefore, you must adopt a system for keeping a record of your financial activities. Entrepreneurs are required to make a lot of transactions with banks and so they make a variety of deposits into their bank accounts in form of loan received, revenue earned from sale of wholesale products and cash deposits from their personal savings. The problem arises when you record some of your deposits as income and consequently pay taxes on money, which you actually did not earn from your business.
Keep Money to Pay Taxes
Entrepreneurs have to pay taxes on money they make from their business but when they do not keep record of their income and expenses, they scramble for loan to pay taxes. Systematically, you must keep a certain portion of money aside to pay tax by the end of every financial year. Mark dates of tax and other payment deadlines on your calendar in advance to make sure, you actually make payments when they are due.
Keep Record of your Invoices
Along with taxes and other due payments, you must have a record of your bills and unpaid invoices and make it your habit to pay the bills before it gets too late. Remember, late and unpaid bills can hurt your cash flow.