By: Bill Few Associates, Inc.
In case you haven’t heard, this week is National Small Business Week! With there being 32.5 million small businesses in the United States, it is obvious that these businesses play a significant role in our economy. According to the U.S. Small Business Association Office of Advocacy, “Small businesses have generated 12.9 million net new jobs over the past 25 years, accounting for two out of every three jobs added to the economy.”
It is important that we help our small businesses thrive, and one critical way for them to do this is by keeping up with their finances. Because of this, and considering that it is National Small Business Week, we put together the following 5 financial tips for small business owners:
Tip #1: Use a bookkeeping system and automate your finances with this system so you have more time to focus on your business. In addition to keeping information organized, it can also reduce manual tasks, helping to reduce operational costs overall. Plus, there are many bookkeeping systems to choose from—each one a bit different so you can choose which suits your business’ unique needs.
Tip #2: Review your expenses on a regular basis. Some businesses might benefit from reviewing these expenses twice a year, while others might need to do this more or less frequently. Doing so will help a business see how they are spending money so they can come up with ways to cut back and save. In addition, we recommend periodically checking in with your accountant or CPA, or consulting with an experienced financial advisor if you don’t already have one, regarding any small business tax breaks.
Tip #3: Stay up to date on small business grants and apply to them. Small business grants are awarded to qualifying applicants and do not need to be paid back. While the process might seem tedious, the payoff can be worth it if you can secure a grant for your business. There are many different types of grants ranging from federal, state, regional, and specialty—which can include numerous categories such as women, veterans, and minority groups. The first step is to look for applicable grants for your business so you can get started with the application process.
RELATED: Read why to include estimated tax payments in your financial plan.
Tip #4: Pay yourself, then invest in growing your business. As a small business owner, it is important to pay yourself, and there are two ways to do it. You can either pay yourself a salary (a stable, recurring expense to your budget where taxes are taken out up front) or you can do this via an owner’s draw (a flexible amount that changes based on business performance and one where taxes are paid at the end of the year). No matter how one pays themselves, it is important to have enough money to set aside and invest in growing your business. This can be done in different ways such as paid marketing efforts, networking events, hiring employees, and strategic partnerships.
Tip #5: Consult with a professional financial advisor to help you stay on track to reach your goals. This tip might seem obvious, but not every small business has a financial advisor on their side to help them get organized, stay focused, and provide timely, valuable insights and expertise. Business owners can lean on their advisor to provide insights about risks, investment opportunities, ways they can cut back on costs, taxes, and much more.
Small businesses are ever important to our economy and communities, and we hope these tips can help them to be successful and grow over the years to come.
If you have questions about this information or how we can serve you and your small business, call us today at 412-630-6000. Our experienced financial advisors are ready to help.
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QUICK LINKS: At Bill Few Associates, we offer a wide range of financial planning services tailored just for you.