Key takeaways

  • Plan for success by building a business plan, saving enough money to launch and putting together a budget.
  • Work to separate your business and personal finances by opening a business bank account and choosing business credit cards with handy benefits.
  • Stay on top of your financials with regular budget reviews and good bookkeeping practices.
  • If you're struggling to keep up with bookkeeping or expenses, consider budgeting to bring in external, professional help.

Whether you’re a seasoned entrepreneur or just starting your own venture, one of the best things you can do for your business is organize the financials.

By developing a strong strategy for your business finances, you can establish the strongest techniques to reduce business costs, project for the future and prepare for tax season. Here are seven great organization tips you can begin to implement today.

1. Start off on the right financial foot

The beginning stages of starting your business is the best time to set yourself up for long-term financial health.

First, your business plan can act as your road map. A traditional business plan often covers everything from in-depth financial figures to your forward-looking plan and financial goals.

You can also look into resources to help you get your business started. Different local, national and private organizations can help you find funding and resources to launch your business.

Nevertheless, you should also make sure you’re financially prepared to dedicate a significant amount of money, especially early on. While amounts can vary greatly depending on your industry, data shows that small business owners spend about $40,000 in their first year alone.

2. Develop a business budget

Creating a business budget is similar to creating a budget for your own household. You want to be sure that you’re spending within your means and borrowing to create wealth, rather than deplete it. Without a budget, you run the risk of overspending and descending into debt.

Among the questions you’ll need to answer so you can develop a realistic and flexible business budget include:

  • How much capital do you have now and coming in soon?
  • What are your business’s fixed and variable costs?
  • Do you have funds set aside for future expenses or emergencies?

Once you have your business budget, you can create a profit and loss (P&L) or income statement. This is a snapshot of your business’s income and expenses over a fixed time period, such as a quarter or fiscal year. You’ll also need this document if you choose to apply for a business loan.

3. Select the right accounting software

The right tools can make maintaining your business budget a lot easier — and save you time when tax season comes around.

There are many accounting software programs on the market. Choose one that matches your industry, needs and financial constraints. Free or low-cost versions are often available, offering upgrades if you need more bells and whistles later.

Almost all of these programs can assist with your cash flow, payroll, invoices, paying vendors on schedule and preparing you for tax time. You don’t have to hunt down receipts or wonder if you have the cash to pay the bills, since that information lives on your desktop, ready for you any time.

4. Open a business bank account

An important rule of an organization as an entrepreneur or small-business owner is to keep business and personal costs separate.

It’s wise to have a deposit account designated for business use only. Not only does a separate account help you remain aware of cash flow, but if your company runs into legal trouble, your personal assets can be protected against lawsuits and audits.

“Figuring out how to separate the expenses tied to your business from your personal finances can take some getting used to,” says Bob Marshall, business growth and strategy executive for small business development at Wells Fargo. “It can also take time to open business accounts and get the systems in place to properly track your business financials. But that separation is important. It can help you determine how healthy your business is, and it makes life much easier around tax time.”

You can even get creative with your accounts to make organizing your finances even easier.

“I have different accounts with the same bank for operating costs, salary, expenditures, taxes,” says Sejal Lakhani-Bhatt, CEO of CloudWerxe and TechWerxe. “That way I know for sure I have the money for them when I need it.”

5. Choose the right business credit cards

As with deposit accounts, don’t fall into the disorganization trap of mixing personal and business credit card transactions. Not only can it needlessly complicate your financial affairs, but consumer cards won’t offer the unique benefits of business credit cards for your spending and organization.

How to choose a business credit card depends on your credit score and what you want out of the account.

Some business credit cards come with free expense management tools. The American Express® Business Gold Card comes with an annual year-end summary, the ability to connect your account to Intuit QuickBooks, access to Vendor Pay by Bill.com and more.

If you want to grant certain employees access to the account, many small business cards offer additional employee cards for free, like the Ink Business Preferred® Credit Card from Chase. You will have instant access to their transactions, too, so you won’t have to wait for them to submit an expense report.

A business credit card can also help you build your business credit score, which is different from your personal credit. Great business credit is essential for accessing future financing, insurance and more.

6. Make regular reviews or audits a habit

Even with the best systems in place, it can be easy for your financial management to fall aside when you get busy. If that happens, and you wait too long to get back on track, all that hard work you did to organize your business budget can fall into disarray.

Mark your calendar for at least a monthly review of your money, though more often is even better.

Lakhani-Bhatt checks her accounts receivable, accounts payable and monthly invoices twice a month so that she can detect any changes that need to be made early. “Quarterly we review projects we want to do, check prices,” she says. “Annually we do a full review of vendors, find out if we need new technology.”

Commit to making the review of your own business’s financials a priority, and you can ensure you’re pacing toward your plans, or adjust your budget as needed.

7. If you don’t have time, delegate or hire

Ultimately, you may become overwhelmed by the demands of keeping your business finances organized. Before that happens, take your temperature.

Are you anxious about whether or not you can pay your vendors and suppliers, or is your credit card bill escalating uncomfortably? Do you think your expenses might be too high but aren’t sure how you can lower them? Are you behind on your quarterly estimated taxes?

Whatever the case, if you can’t handle your business finances on your own, you might find it more useful to delegate to a qualified, trustworthy person in your company or hire an outside professional.

A bookkeeper can assume responsibilities like expense monitoring, bill paying and recording transactions. An accountant can help with longer-term financial advice and taxes. Assess where you’re falling astray to determine the type of help you’ll benefit from most.