Wrong Tern Finances

Business owners are faced with more than just the direct challenges that are a result of operating their businesses. Not only do business owners have to perform the duties of their specific business; but they also have the responsibility of managing any staff, and keeping track of finances.

Business finances can be a nightmare! Most business owners are very pressed for time, trying to get everything accomplished- and it could be their record keeping suffers as a result of the lack of time. Credit cards can help you resolve this situation, and actually save you time and money. You might be wondering how a credit card could save you money, considering they have interest fees and finance charges and all sorts of “hidden” expenses; but with the right business credit card, your financial record keeping will not only become easier to manage, but will in fact reduce the time it takes you to pay your expenses and saving that time will result in your ability to put your time into money-making activities.

Pay All of Your Business Expenses With a Single Credit Card

The first step to easier financial management and record keeping is to obtain a credit card and designate it your one-and-only method for paying your operating expenses. Whenever you need to purchase business supplies, make a utility payment, order lunch for staff appreciation day – you’ll whip out your new card and that’s where the charges will go.

That means you won’t pay with a personal check and have to transfer funds later to make sure you’re keeping your business and personal money separate. Using a single credit card for all your business needs means at the end of the month, you’ll receive a statement that itemizes every expense you had for the month.

Have you discovered the value in this yet? When you pay for everything on the single credit card, you’ll receive a single statement with a list of everything you’ve purchased or paid for, all in one- convenient place! You’ll easily be able to divide your expenses into categories for tax reporting purposes, and see at a glance what you’ve paid for the month versus what your business income was for the same month.

Give Key Employees a Business Credit Card

If you have office managers or other staff that have to make purchases for the business from time to time, there is a simple solution to this situation as well. Simply order additional cards in the employee’s names and all of their purchases will appear with yours on the itemized statement. Many credit card companies will divide the purchases by each of the credit cards you have on the statement, so you can also easily see at a glance which cardholder made which purchases.

Easier Checkbook Balancing

Once you’ve begun making all of your company’s purchases and expenses using your credit card, you’ll find that keeping your checkbook under control is a much easier task! Rather than having numerous entries throughout the month, you could very well have only the need to write out just one check each month to pay your credit card balance. It’s much easier to balance a checkbook with one or two transactions than one that has a few hundred checks and ATM card purchases going through each month!

Additional Benefits of Using Business Credit Cards

In addition to each of the benefits described above, using credit cards for business expenses makes it possible for you to earn rewards from various rewards programs offered through card issuers. You could be earning cash back or airline miles, among other benefits, that build up rapidly when you use your card to handle all expenses each month.

By: Brandon Ryan

About the Author:

Kansieo.com

Loose papers, receipts, notes, credit card bills, financial statements, tax returns – these are the byproducts of owning a business. They take up space on your desk and in your mind and every time you look at the litter you feel disorganized.

Before I created a system to organize my business paperwork in the manner I’ll soon explain, I felt disjointed, out of whack, and like I never got anything done. I’d walk into my office and want to turn right around and walk out.

Is there a better way to organize your business finances? You bet. Follow the steps below to create a simple, yet functional way to organize your business and live a more carefree life.

Step 1 – Get a Binder

Purchase a three-ring binder based on the volume of paperwork you produce annually. A 1.5″ or 2″ binder would be adequate for most businesses. You will use one binder for each year you are in business, so that every detail pertaining to your business that year is in one place for easy retrieval. In the viewing window type a cover that shows the name of your business and the year.

Step 2 – Get a Three Hole Punch

Purchase a three-hole punch. This is to hole punch all larger receipts, documents and financial statements and have them fit neatly into your binder.

Step 3 – Get a Zipper Compartment

Purchase a plastic zipper compartment from an office supply store to hold small receipts.

Step 4 – Purchase Accounting Software

Get yourself accounting software so that you can track your finances. Professional business owners track their profits and losses using the right tools and analyze their financials regularly. I recommend QuickBooks, but there are others such as Peachtree, Microsoft Office Small Business, and Simply Accounting. Try to begin tracking sales and expenses from the beginning of your business or the beginning of the year.

Step 5 – THE SYSTEM:

Arrange paperwork in your binder according to month. Keep all receipts, credit card statements and bank statements (make sure to reconcile these monthly), and sales tax reports (if you sell products). At the end of each month, run a Profit and Loss Statement and a Balance Sheet (collectively known as Financial Statements). The Financial Statements become the separator for each month. File small receipts that can’t be hole-punched in the zipper compartment at the back of your binder.

Step 6 – CLOSE IT OUT

At the end of each year, reconcile your accounts, print your annual Financial Statements, and close out your year. Put the binder away and start a new one for the New Year. Give your accountant or CPA a copy of your QuickBooks file to prepare your income tax return.

Tips:

o Only handle receipts one time. Review them. Record them in your software program. File them in your binder.

o Use one credit card for business and one for personal expenses. This way you can maintain separate business and personal expenses. If you ever need to carry a balance, you can easily determine the tax-deductible interest.

o Consult with your accountant or CPA regarding what is and is not tax deductible.

o Make an appointment with yourself one to two hours a week to do your business finance organization. When you have room in your budget, hire someone to come in and do it for you.

The system above is one way to organize your business finances. If you would like to go beyond this system and organize your business for financial success, you may want to consider writing a Business Plan.

Tags: Accounting Software, Business Finances, Professional Business Owners