In the U.S, there are 30.7 million small businesses, all of them bringing creative solutions to their customers’ real needs. However, with many businesses as small as a one-person operation, it can create a lot of pressure on those hoping to “be their own boss.” While you are maybe passionate about your products, your customers, and the latest innovations you bring to the industry, being a one-person show means wearing a lot of hats, including an accountant. For those first-time entrepreneurs, crunching the numbers might not be why you started a business. However, here are six creative ways to manage your accounting needs and keep your business humming.
1. Keep Retirement in View
While it may be a long way off for some, no matter your age, you can’t understate the importance of putting away money for retirement. When people start paying for your product, it may be tempting to pump it back into R&D or new office chairs, but setting aside money for retirement will be an exciting use for your profits years down the road, even if it seems pretty boring at the moment.
As Gloria Steinem warns, “Planning ahead is a measure of class. The rich and even the middle-class plan for future generations, but the poor can plan ahead only a few weeks or days.” Or Proverbs 13:22, “A good man leaves an inheritance to his children’s children.”
2. Get Help Finding Tax Write-Offs
How much money are you leaving on the table for write-offs you forgot or missed? The folks behind Keeper Tax believed that on average, businesses can expect to save over $6,000 per year on tax deductions. So it is advisable to keep track of your business expenses throughout the year for potential tax write-offs that can save you big dollars on the next tax season.
Using reliable tax software such as Afirmo Tax software can help you accurately track and categorize your business expenses, ensuring that you don’t miss any potential write-offs. With the help of tax software, you can maximize your deductions and minimize the amount of money left on the table.
However, if you live in Missouri, working with a trusted CPA is the best way to make identify potential tax write-offs and ensure that your business is taking advantage of all available deductions. Having a good Missouri CPA as a strategic partner can provide valuable guidance and support in managing your accounting needs. It can also bring peace of mind knowing that your business finances are in good hands.
3. Be Diligent About Financial Projections
It’s hard to know where you’re going if you don’t have a map. A financial projection is exactly that, a map of the road ahead, and yet some business owners neglect charting their growth plan. Instead, the diligent entrepreneur projects their income for the next three to five years with detailed budgets and expenditures.
As Jim Rohn says, “If you don’t design your own life plan, chances are you’ll fall into someone else’s plan. And guess what they have planned for you? Not much.”
4. Be Prepared for Big Expenses
Like Murphy’s Law states, “Nothing is as easy as it looks. Everything takes longer than you expect. If anything can go wrong, it will go wrong… and at the worst possible moment.”
While Murphy is a bit of a downer, it is important to be prepared for a major expense. Some great advice is to already be planning to replace that piece of expensive machinery or upgrading your servers and then sock away some money into a separate account. Then when your high-end computer starts slowing down or freezing you have the funds to replace it. And if it keeps going? Great! You’re that much more prepared when it finally kicks the bucket.
5. Back Everything Up
Speaking of Murphy’s Law, backing everything up in multiple places is never a bad idea. Your data is precious, not just for the running of your business, but apparently, the IRS thinks so too. And there are many convenient cloud-based storage options out there that ensure if your physical or local copies are damaged, you can still access your files.
6. It’s Not Personal
Finally, know where to draw the line between your business and your personal life, especially when it comes to your bank account. While many new entrepreneurs may revel in the idea of merging their business accounts and personal accounts, that can make life miserable. Instead, separate your business and personal expenses to avoid confusion. Your business is your business, treat it like one.
In the end, accounting doesn’t have to be a hurdle for new and experienced entrepreneurs. If you have a dream and a vision for your company, don’t sell it short by getting lazy with the accounting side of things. Whether it’s planning ahead by socking away money for future expenses or retirement, keeping track of tax-deductible purchases, or backing up your data, take special care of all the numbers behind your business, they’ll definitely thank you for it in the future. Or as Idowu Koyenikan says, “When money realizes that it is in good hands, it wants to stay and multiply in those hands.”