Every business, big or small, should have a clear to manage expenses. Keeping precise records of your business cash flow will help you understand how the business is doing, when it can expand and how independent your business is. While this may not sound entirely necessary it is and you should not ignore it. Your business accounts and your personal accounts are two different things and they should therefore be kept independent of each other. Managing your business expenses is the only way to determine the strength and independence of your business. Here are a few ways Shopify can help manage business expenses.
- Separate Your Personal Costs From Business Expenses
At times you might think that mixing all your expenses is not a big deal since your personal accounts and business accounts are generally your accounts. The dancer here is that one might fail or end up depending entirely on the other. According to Entrepreneur Magazine, “They move money back and forth and it is very important to keep their records separate,” says Edward Wacks, a business financial advisor based in Plantation, Fla. This will not be a good thing for your business. You will agree that it feels good when you, a business owner, are aware that your business is independent and can stand for itself. This kind of business can thrive even when the business is facing a lot of challenges.
- Keep a Record of Your Daily Expenses
Having clear and concise records of your daily business expenses helps you have knowledge about your money use. In these records, you should clearly indicate which account facilitated anything you take care of daily. It is important to make sure, for instance, that your personal accounts paid for a business trip, and that at the end of the day that money is paid back and vice versa. This way each account will be running independently from the other and you are more likely to succeed in business.
- Review Your Expenses Weekly
If you have been keeping detailed and accurate daily expense records for your business, then analyzing them for a weekly review will not be a hard thing. This will help you analyze how much the business has made in a week, as well as help plan for the future. These weekly reviews are also very useful on your yearly records and returns. It is from these weekly reviews that you can determine when the business is ready to expand. According to Entrepreneur Magazine, “Most people don’t know to ask about them,” says Ed Slott, a certified public accountant and founder of IRAHelp.com.
- Keep All Your Receipts
Keeping receipts for anything purchased for your business is an important thing for any business. With massive improvement in business technology, producing your business receipts as well as storing receipts online is easier. This is safer and more reliable too and will definitely help you easily access all your records if need be. When it comes to petty cash, do not ignore keeping the receipts. In fact, petty cash use should be strictly limited to when absolutely necessary. Failure to trace this kind of money might lead to damage that you might not otherwise anticipate.
- Choose the Most Effective Cost Cutting Methods
Every business at times relies on another type of business to obtain services. Using your receipts, you can compare which provider is giving you services at a lower price. However, this at times might be tricky, as you also want the best quality. There are some things that really don’t depend on quality. Consider involving your employees in helping to cut business expenses. Try talking to them and getting them realize that cutting cost for the business will help you rise together with them. Doing this will make them feel valued and you will be surprised at how willing they are to collaborate with you. Any activity that seems to be using funds and giving nothing in return should be either terminated or at least cut short.
- Stick To Your Set Budget
At the beginning of your business year, there is a budget that you set to achieve certain goals for your business that particular year. You should develop a business budget discipline that will help you stick to your original budget. Even if you feel that your business is doing better than expected, business budget discipline as indicated. According to The Serial Investor and Shopify brand ambassador “Don’t make your pitch, or your brand backstory, sound all rosy because I don’t care what brand you look at or how big they are now, all of us know that times have not been great all of the time.” This perspective should help you stick to the initial budget until another budget year. This way, you will have new budget plans each year depending on the profits of each year. If you can master these few tips, then your business will be safe from overspending and you will always have a clear and concise financial analysis for your business.
By Simon Davis
Photo by Pressmaster | Shutterstock
Simon Davis has been a full-time business writer for the last four years and has had the privilege of attending some of the most renowned business conclaves held across the world. When not on business he loves spending time with his girlfriend and a bit of adventure sports.