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There is nothing quite like the early signs of the spring season. The air is fresher, flowers are starting to bloom, birds are chirping, butterflies are floating around the garden, and the sun is shining brightly. A nice warm breeze ruffles tree leaves and transforms hanging patio chimes into mini musical instruments. In short, everything feels new again when spring arrives. This is the time of year when millions of Americans partake in spring cleaning to get their homes and apartments looking clean and organized.
This is also the time of year when many small business owners spring clean their finances by evaluating their budgets, getting their financial paperwork and tax documents in order, and planning for the months ahead. This Balboa Capital blog article explains how to spring clean your business finances.
Review your business expenses.
Keeping accurate records of your business expenses is important because it helps you identify which costs contribute to your bottom line and might be too costly for your operations. For example, many obvious business expenses include rent, marketing, payroll, and inventory, but you might be spending too much on business meals and entertainment.
Or, you might have several financial accounts resulting in high-interest payments. If that is the case, consult with your accountant or financial advisor. They are experts in these matters and can provide you with recommendations on how to reduce your debt. In addition, many small business owners save money by consolidating bank accounts, loans, and insurance policies.
Simplify your accounting practices.
Another way to spring clean your business finances is to evaluate your current processes to see if there might be ways to improve them with greater efficiency and accuracy. As you know, accounting is a crucial part of running your business. It helps you keep track of your finances and ensures you are not spending more than you are making. Many different accounting methods can be used to keep track of your finances.
The most popular ones are cash-based accounting, accrual-based accounting, and hybrid accounting. Using business accounting software is one way to effectively manage your company’s books, stay organized, and save time on tedious tasks like bookkeeping. In addition, accounting software can help you with your taxes, payroll, invoicing, and more. It can also help you manage your inventory and keep track of your expenses.
Update your budget.
The best way to spring clean your business finances is to start with the basics. That means reviewing your current budget and updating it if needed. A budget is essential for any business owner who wants to stay on top of their finances. A budget will help you plan how much money you have coming in and how much is going out. You can then use that information to set goals for your business, such as how much money you want to save and what you want to spend your money on.
Spring is an excellent time to revisit your business’s budget to see where you can make adjustments for the future. For example, if you want to expand into a new market, develop a new product, or launch a new marketing campaign, you might need to cut back in certain areas to help cover the costs. Lastly, if you find any cash flow gaps, develop strategies to close them. Updating your budget is something you should do every month, not just one time each year.
Evaluate your marketing efforts.
Marketing is a vital component of any small business, including yours. It is the process of communicating the value of a product or service to customers. Popular marketing strategies include advertising, public relations, direct mail, and social media marketing. Of course, an optimized website for search is a much-needed piece of the marketing mix in today’s digital business world.
When evaluating your marketing efforts, there are many things to consider, but the most important thing is to ensure you consistently improve your marketing plan. And if your marketing is not generating a positive return on your investment, perhaps it is time to allocate your funds elsewhere. It is not uncommon for business owners to boost their marketing budgets in areas producing the best results and reduce or eliminate the strategies that are not helping drive revenues.
Modernize your business.
Of course, when spring cleaning your business finances, your primary goals are to cut costs, save money, and optimize your overall budget. That said, looking at ways to modernize your business can be worthwhile. Yes, this will require a financial investment. But it can prove beneficial to your company’s productivity and bottom line in the future.
With the rise of new digital technologies, businesses invest in new technology to keep up with the competition and succeed. Some popular technologies include cloud software, customer relationship management (CRM) software, payment processing systems, and inventory management software.
Before buying or financing business technology, you should ensure it is necessary to grow your business. Investing in new office equipment such as computers and printers is also good if you have been using the same old models for a long time and they have become outdated.
Get ready for the busy tax season.
With the busy tax season right around the corner, now is a great time to gather your financial documents and prepare them to file. Doing so can help ensure an accurate and timely tax filing with the IRS, plus help you identify possible ways to save money. Taxes are an inevitable part of running a small business. However, they are not always straightforward. So, it is a good idea to hire a professional accountant.
The reason is that accountants know the latest tax laws and rules and can help you file the correct type(s) of business tax forms and maximize your deductions. In addition, an accountant will let you know which financial statements, expense receipts, and other tax-related documents are required to file your return. Finally, preparing your taxes correctly and on time is vital to avoid penalties.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.