5 Money Management Skills Every Small-Business Owner Needs
Small businesses are the heart of our economy — making up 99 percent of U.S. employer firms, according to Babson College. And while your most important task as a small-business owner is to serve your customers, developing some business finance savvy is essential, too. Boosting your financial literacy is easier than you think, especially when you use budgeting software to help. Learn the top five skills you need to master and how Quicken Home and Business can help you along the way.
1. Sticking to a Budget
At the heart of every successful business is the ability to budget. Understanding budgeting basics, including how much money you’re making and spending each month, is absolutely essential for assessing the health of your business. On the most basic level, monthly budgeting helps you know if you’re making a profit — and if so, how much. It also helps to track client spending habits from month to month and year to year. Budgeting is also essential for measuring the impact of your business decisions. If you’re not carefully tracking your finances, there’s no way to know whether a prior decision resulted in a profit or if it had a negative impact on your bottom line.
That’s why smart small-business owners invest in budgeting software like Quicken Home and Business. The software imports your revenue and transactions from all of your business accounts to give you a complete picture of your financial health.
2. Setting Realistic Goals
Speaking of goals — successful small-business owners know how to set the right ones. In fact, your goals should be SMART: specific, measurable, achievable, results-based and time-limited. In short, that means using your current budgeting data to set financial goals tailored your business.
Quicken Home and Business helps you make specific, actionable and realistic goals. Regular budgeting helps you track expenses over time, so you can identify wasteful spending and trim costs to increase your profit margins. Alternatively, you can look at business costs, cash flow and cash holdings to determine whether you have sufficient cash on hand to expand your business or whether you should start thinking about taking out a loan to reach your goals. And because you’ll continue budgeting after you set your goals, the app measures their financial impact.
If you’re a startup or solopreneur, it’s all too easy to run your business from your personal bank accounts. This causes confusion when you’re trying to measure business revenue and expenses separate from your personal finances, which could cause trouble at tax time. Without separate accounts, the IRS could deem your business more of a hobby, nixing your ability to claim some tax deductions, such as home office expenses.
Make certain you run your small business from bank accounts that are completely separate from your personal accounts. Keep other business-related accounts like PayPal or Venmo business only. Quicken Home and Business tracks both your business and personal budgets separately, so while you get the convenience of working from one app, your business and personal finances remain separate.
4. Keeping Documentation and Receipts
While record-keeping might not be the most exciting part of owning a small business, it is an essential one. You’ll need to keep a record of every transaction — particularly those you plan to deduct as business expenses — in order to have all the documentation you need come tax time. That goes for all obvious business-related expenses, like utility bills and office rent, and all home office expenses you plan to claim on your taxes.
That doesn’t necessarily mean you need to keep a gigantic stack of receipts on hand at all times. Instead, use the Quicken app’s Snap and Store feature to keep a photo of your business receipts. Quicken Home and Business also makes it easy to track home expenses separately, so you can also use the budgeting software to keep track of home office deductions.
5. Collaborating on Financial Management
Even if you’re a solopreneur or sole founder of your business, you don’t have to process all your financial information alone. Often, you’ll want to work together with business partners, investors or contractors (like accountants) to go over your business’ financial data to make decisions about the future or simply to make tax time a little easier.
Quicken Home and Business allows you to sync financial data across multiple devices so you can easily share budgeting information with trusted partners — and save a few trees while you’re at it!
Just a small time investment into tracking your business’ financial health pays off big in setting and reaching the best business goals for you. And the convenience of a budgeting app lets you focus on what’s most important — serving your clients and customers.