Richard A. Lindsey, CPA

Lindsey & Waldo, LLC – Certified Public Accountants

  • Oct 15

    It didn’t take long for her business to fold.

    She was 22 years old, passionate, excited and a first time business owner.

    Why was she forced to close the doors?

    Not the reason you might expect: lack of sales.

    She went out of business because she didn’t keep good records. Records for taxes, budgeting, and cash flow.

    Depending on your personal experience, it may or may not surprise you that poor recordkeeping is one of the top reasons for business failure.

    Taking care of billing, tracking your expenses, taxes, and other financial housekeeping can seem overwhelming, stressful, or just plain boring for new business owners.

    Even for those who’ve been in business a while it is often one of their least favorite things to do. So it’s easy to coast along thinking everything is hunky dory – that’s a technical term – until WHAM! All of a sudden you discover sales are down by 20 percent and expenses are up by 15.

    Getting and keeping your financial house in order makes things not only less stressful, but can help ensure that you don’t overspend and that you have enough money for your savings, investments and retirement.

    Here are five tips for getting your financial house in order.

     

    1. Get some advice. I know, I know, it sounds self serving but, if you’ve never been in business for yourself, or if you struggle with managing your finances, get some advice. It could be the smartest investment you make in your business, and one that could prove crucial to your survival.
    2. Create a budget. Yes, I know it’s not exciting or sexy. You want to get out there and sell, do, or make whatever you started your business to do. But, IT IS NECESSARY! Be very conservative. Plan for the worst case scenario, not the best.
    3. Track everything. Keeping track of income, expenses, invoices, past due customers, estimated taxes, payroll, etc. can feel daunting at times; however, not doing it can lead to financial ruin or legal hot water. There are plenty of financial tools out there. The QuickBooks you’re already using can be used as a dashboard if you keep it up to date.
    4. Put aside money with every deposit. Put aside a portion of every deposit you make for savings, taxes, and charitable contributions. There are more reasons than I have room to address for why you should save for a rainy day. Included are some real psychological benefits for doing so.
    5. Plan for your retirement. When you are a small business owner, there is no one else to fund your retirement. Even if you’re 22 years old and passionate when you start, that’s not necessarily going to provide you retirement funds when you’re 72. Setting up a retirement plan can also shelter some of your business profits. Start with an IRA then graduate to a SIMPLE plan or Keogh.

     

    Integrate these tips into your business and you’ll find it easier to get and keep your financial house in order; therefore making your business less stressful.