Most small business owners don’t consider themselves number crunchers. Entrepreneurs are a different breed. They have a passion for what they do with the skills and talent to match. They want to focus on what they love and who they serve. Numbers are a necessary evil of running a business.
Sound familiar? You’re in good company. A 2014 Intuit study found that more than 40 percent of small business owners identify as financially illiterate… and yet 81 percent of them do their business’s finances themselves. This could be why half of all businesses fail within 5 years.
This doesn’t have to be you. Managing money, taxes and accounting isn’t as hard as it looks when you’ve got the right tools and good habits to back them up. In fact, mastering your own accounting will give you insights into your business you wouldn’t find any other way.
Here are 6 helpful habits you can use to gain complete control over your finances.
1. Look as Professional as You Are
Whether your clients pay you after a service on-site or you send them an invoice, they’re more likely to feel good about it if your billing system looks professional.
Put your best face forward with professional-looking paperwork, like customizable invoices and estimate or proposal templates so you have a consistent and professionally branded look every time you communicate with your customers.
2. Manage Expenses On-the-Go
Toss the shoebox full of crumpled receipts. Track your expenses on-the-go with smart apps that digitally store and automatically organize them for you. When you’re out and about, you can snap pictures of receipts to capture expenses in seconds.
You’ll know at a glance what you’re spending and how profitable you are without the headache of spreadsheets or shoeboxes. Plus, you’ll take the pain out of tax time by having everything up to date all year long.
3. Let Your Accounting Software to Do the Work for You
It might be hard for a small business owner to believe, but you don’t have to do everything yourself. Most accounting software offers a series of automated tasks that it can manage for you.
In FreshBooks, for example, you can set up automated late payment reminders so you don’t have to keep track of who’s paid when. You can even build in late payment fees to make sure you’re paid what you’re owed. On a brighter note, if you have standing appointments with reliable clients, you can create a recurring profile and set up a billing schedule that automatically and securely charges their credit card.
4. Never Lose Another Billable Minute
Do you often wonder where the day goes? Or the week, for that matter? It especially hurts when it’s time to calculate those hourly invoices and it turns into a rough guesstimate. Find out exactly what’s sapping all those minutes and hours by tracking your time.
You’ll have an easy-to-read breakdown of your hours so you can learn more about how you spend your time and how you might be more efficient. And you’ll be able to pull all those billable hours onto an invoice in seconds so you’re paid exactly what you’re worth.
5. Take Care of Taxes All Year Long
Tax time tends to strike fear into the hearts of business owners, but it doesn’t have to be this way. When you use your accounting tool to enter (and automatically categorize) expenses, invoices and payments, you’ve essentially got all you need come April.
Seriously. All your numbers are in one place–from the money you’ve collected to the taxes you’ve already paid and everything in between. You’re primed to file, no stress necessary.
6. Pay Attention To Performance
The more you use accounting software, the smarter you both become. What’s your most profitable month? Who are your top three clients? Are you turning a profit or do you need to switch gears?
FreshBooks’ Reports feature lets you dig deep into all the ins and outs of your business so you know where to focus and what to tweak. When you have access to important information about your business at your fingertips, you can make smart, big picture business decisions.
Accounting is to your small business what good nutrition, exercise, sleep and stress management are to the well-being of the human body: good habits that contribute to overall health and success.
And conquering your fear of accounting is simpler than you think. You don’t have to be a numbers nerd to understand small business accounting—you just need the right tools and a positive mindset to implement a system that works for you. Taking care of it in small increments all year long lets you know where you stand and helps generate the information that makes tax time a breeze.
This is one habit worth taking up!
This guest post was written by FreshBooks for the Artichoke blog. FreshBooks makes invoicing and accounting painless for millions of small business owners.
About the Author
Heather Hudson is an accomplished freelance writer and journalist based in Toronto. She writes for a number of publishing, corporate and agency clients who depend on her to deliver high-quality, on-brand content and journalism with a fresh perspective. Learn more about her work at heatherhudson.ca.