While you might be able to run a site like no one else, it takes more than just industry experience and competence to run a business successfully. There are other responsibilities that you need to handle, as well, with your finances being one of the big ones. If you’re not used to keeping your own business finances, then here are a few tips that can help you set up so that you keep them organized not only now, but even as your team grows.
Start working with accounting software right now
First of all, you need to make sure that you’re on top of your bookkeeping from day one. There are plenty of accounting software suites that are well set up for small businesses, including those that are designed specifically for construction firms. These tools can help you keep track of your finances from day one, taking data like your current bank balance, and automatically applying expenses and incomes so that you’re always able to see the financial health of the business. More importantly, they begin the important work of keeping records, which is crucial not just for managing your expenses, but also for doing taxes when the season comes.
Keep your personal and business finances separate
When working as a small business owner or an individual contractor, then you might not see much purpose in separating the money that you earn. However, as you grow to head your own firm, then it’s important to make sure that you set clear boundaries between the personal and the business. Find the best business bank account that you can and make sure that any business earnings go in there, first. You should pay yourself a wage from this account, of course, but you want to make sure that you’re not accidentally dipping into company funds for personal expenses, or vice versa. Splitting your finances between the business and the personal and also make it a lot easier to track costs when filing taxes, especially when you want to claim them.
Keep an eye on the cashflow
Making sure that your business is in a good position, financially, is about more than just making sure that your business bank balance is in the black. You also want to pay attention to the cash flow over time. This is the live tracking of expenses and incoming money to see whether or not you’re making a net gain or loss for a period of time. Keeping a positive cash flow might mean making sure that you’re scheduling payments out around the same time that you’re expecting cash to come in, as well as breaking up invoices to keep customers paying more regularly. If your cash flow comes in fits and starts, it can make it harder to have the cash on hand when you need it most.
Work with the right accountant
When it comes to tax season, you might want to make sure that you’re able to make use of what claims that you can. However, you also don’t want to trigger any red flags that could lead to an audit. Even when there is nothing to find, audits can be major wastes of your time, which means that they’re also wastes of money. As such, you want to make sure that you’re working with a construction accountant when putting together any tax strategies. Accountants do more than making sure your taxes are filed correctly, they can also advise you on filing strategies to help you keep more of your money while mitigating any risk.
Know when to use finance
You shouldn’t always be using cash to get the things that your business needs. When it comes to additional equipment and labour, then spending liquid cash to get it in-house isn’t always the smartest solution. You need to measure your need for it to see whether or not it is truly worth the investment. For instance, outsourcing your labour might sometimes be the right solution if you don’t have a guaranteed need for a particular worker in the future beyond one project. Equipment financing is a very common part of the construction industry as well. There’s no point buying vehicles and machines you’re only likely to use once in a blue moon.
If you’re not able to manage the finances of your construction firm effectively, it can begin to have a domino effect on how you spend for projects, how you invest, and how you handle crises like cash shortages. Make sure you take the time to get organized now, not later.
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