Nellie Akalp is the CEO of CorpNet.com, an online legal document filing service, where she helps entrepreneurs incorporate or form an LLC for their new businesses. Connect with Nellie on Twitter or visit her free resource center.
Spring is in full bloom and for many that means dusting off the cobwebs and cleaning the dog’s nose prints off the windows. For small business owners, it should also mean taking a good look at their business finances.
[More from Mashable: 20 TV Shows With the Most Social Media Buzz This Week [CHART]]
Now is the perfect time to take a spring cleaning approach to the business issues that often get put off. Here are six ways to clean up your financials and get organized.
1. Talk to a CPA
Now’s the perfect time to make an appointment with your tax advisor, as you’ll both have more time to discuss your financials and will be focused on long-term strategy, rather than getting through this year’s tax season. Most importantly, you’ll still have plenty of time to act on his or her suggestions while it’s still 2012.
[More from Mashable: Tech Celebs Abound at the White House Correspondents’ Dinner [PICS]]
2. Re-evaluate Your Business Entity
Many small businesses start out as sole proprietorships or partnerships, but then eventually transition to another entity as they grow. For example, if your business is not incorporated, you may want to consider incorporating (or forming an LLC) to shelter you from some financial risk and possibly save money on taxes.
Sometimes an entity is formed with one income target in mind, and you might need to reconsider the entity for a different income level. Failing to adjust your business entity for your revenue can be a costly mistake. Discuss the different legal entities with your CPA, so you can determine the right entity for your situation and the right time to make the change.
3. Review Estimated Tax Payments for 2012
Now that 2012 is in full swing (and your 2011 taxes are done), it’s a good time to review what your business has made year to date and your forecast for the rest of the year. Then assess your estimated tax payments to avoid having to dole out underpayment penalties next year. Likewise, there’s no reason to overpay with your estimated payments; interest rates may be low, but there’s still better things your business could be doing with that money.
4. Separate Business and Personal Finances
If you haven’t done so already, take the steps to keep your personal finances and expenses separate from those of your business. This is mandatory if your business is an LLC or Corporation, but it’s good practice for sole proprietors as well. This means a few things:
- Open a business credit card: While I normally don’t recommend opening any new credit lines, in this case it’s a smart idea. By putting all your business expenses on the business card, you’ve got an instant audit trail of your year’s expenses when tax time rolls around again. Of course, you should be saving merchant receipts as well.
- Open a business checking/savings account: If you’re operating as an LLC or Corp, your business needs to have its own checking account. If you’re a sole proprietor, you’re able to use your own personal checking account. However, consider opening a dedicated savings account or money market account where you can transfer approximately 25% for each check or payment received as your own personal tax withholdings. This strategy will make it far less painful when it’s time to pay your self-employment and small business taxes.
5. Use a Cloud App to Get Organized
There’s no shortage of affordable cloud-based and mobile apps to help small businesses streamline their operations and finances. Of course, in the daily grind of running your business, it’s all too easy to stay with the status quo. This spring make the time to try out at least one new web-based tool. For example, there’s FreshBooks for invoicing, Expensify for expense reporting, and countless other time tracking, travel, and industry-specific apps.
If you’re not sure where to begin, consider what make up the toughest parts of managing your finances. Are you slow to invoice clients? Did you have trouble digging through random receipts while filling out your Schedule C this year? Do you forget to track your mileage for client meetings? Your biggest headaches offer the best opportunities to improve your execution.
6. Don’t Forget Traditional Cleaning
When was the last time you cleaned your laptop keyboard or wiped down your phone headset? Ever mistake dirt on your display for punctuation? There’s no reason not to take the term "spring cleaning" literally and clean your devices to keep them looking their best.
None of these tasks will necessarily be things you’ll enjoy, but once done, you’ll be amazed at the difference they can make to your productivity, bottom line, and mindset.
Image courtesy of iStockphoto, catenarymedia
This story originally published on Mashable here.
No comments:
Post a Comment