On any given day, small business owners are paying out invoices, processing payroll, and practicing bookkeeping. While managing business expenses can be overwhelming and tedious, this essential responsibility remains a priority to help protect the bottom line. There are many ways to make the task more efficient. Here are several tips to consider.

How to Manage Your Expenses

1. Keep Personal & Business Separate

Co-mingling the two is a recipe for financial risks, especially when it’s time to file your business income return. Establish separate bank or credit union accounts and credit cards for all your business expenses. With each receipt, invoice, or payment due, delineate whether the document is related to business or personal bookkeeping matters. 

2. Create an Emergency Reserve

You’ll typically hear this advice for individuals so that they’ll have access to funds in case of a layoff or other setback. From seasonal changes to delayed vendor payments, small businesses experience unexpected financial gaps, too. To help cover you during these times, establish an emergency reserve that will pay for expenses such as rent and payroll. 

3. Hire a CPA

If the thought of managing your business expenses is daunting, consider outsourcing the task to an experienced CPA. They have the training, attention to detail, and foresight to keep your finances in order. These professionals also customize their services to accommodate your company’s needs. From bookkeeping to tax return preparation, an accountant can oversee your expenses so that you can focus on other areas of your business.

4. Pay Down Debt

It’s inevitable that most business owners will need to take on debt to start or keep their operations going. Whether it’s a loan or credit card, make a commitment to paying down the balances expeditiously. Doing so helps free up capital for advertising, hiring, and other areas to grow your business. Avoid taking on too much long-term debt. Additionally, make on-time payments so that if you do need a loan later, your strong business credit history will improve your approval chances.  

5. Keep All Receipts 

When it’s time to file your business income tax returns, these important documents can help you qualify for money-saving deductions. They may reduce any taxes owed, too. The receipts are also needed if the IRS should ever request an audit of your finances. Create files on your computer as a backup to paper documents in case they get lost.

When small business owners need expert accounting services, they turn to Arehart Associates, Ltd. in Waynesboro, VA. The local firm has a team of experienced professionals who partner with companies from a range of industries. You can count on customized attention, efficiency, and compliance on bookkeeping, payroll services, and much more. To learn how the agency can help your business, call (540) 949-0124 or visit the website.