Organization can be one of the biggest issues and dilemmas that small business owners have. It causes a lot of stress that could be eliminated with a consistent way of doing things. Here are our three biggest tips to keeping finances organized.
Pick a Method (and Stick With It)
Our first tip for how to organize finances for a small business is to set up a method of organizing and stick with it. Whether it’s once a month or every other month. We always tell our small business clients to look at your schedule for the month in advance. Maybe you’re slower on Monday afternoons. Make that the day that you do some administrative tasks. You can make one of your administrative tasks organizing your information. Maybe you may have business receipts that you need to organize.
The way that you organize it is really a preference. We have clients that do every single thing digitally. They do not want to maintain paper, and that is fine. But decide how you’re going to organize those files digitally that works for you. Is it alphabetically? By month? Utilities versus some other dues and subscriptions based on your profit and loss statement? You can organize it in the way that makes the most sense to you. It doesn’t matter if it matches the person next to you. However you like to think it through, that’s the way that you need to do it.
Create a Backup and Give Someone You Trust Access
Our second tips to keeping finances organized is to make sure you have a backup system. Then those things won’t be lost if your computer or server crashes. Always test the back up to make sure it works as well.
We always suggest making some sort of master list of accounts. And make sure that you have somebody you trust that has that information as well. This could be a spouse, maybe a sibling, or your attorney. Just have someone know what is happening and be able to access those things in the event that something happens to you. If you get sick or, heaven forbid, you pass away then there’s some information put together as to what is out there for you and for your business.
It’s really critical for someone other than yourself to know where those things are. Just in case of those issues or emergencies. It could be a problem if that happens. You could lose your business. You could be spinning your wheels trying to get everything done for you.
We’ve dealt with clients who have lost the spouse who was running the business and it is very difficult for the one picking up the pieces to know exactly what’s going on. And you may have people that you hire, such as an accountant or a financial advisor, that would have more information than others. You can really rely on them to kind of fill in some of those pieces, but they may not have all of the pieces and may not have all of the information that you need. Especially when it comes to checking accounts and any debt that’s out there, having a master list of what’s going on within your business is really helpful.
Download Bank Records
The third tips to keeping finances organized is to download bank records. Download them as they come out monthly or quarterly. The banks aren’t aren’t your filing system. Each bank has their own set of requirements for what they’re willing to carry in your online account and for how long. It could be 12 months, it could be two years. They don’t keep all of your statements forever. We’ve had many, many clients who have had to go back and get bank statements, get credit card statements for tax audits for a number of different things. They’ve had to go back to those banks and sometimes there’s additional fees for that.
Also, what if you close that account? What if you decided that you got a better rate on a different credit card and you no longer have that account? Your online access basically ceases when you close that down. The best thing to do is to download anything that you get on a regular basis so that you do have it and you’re not going back to a bank that you no longer work with and possibly have to pay some fees or see if they can get you old statements.
This is also true for payroll tax returns and any kind of tax return filing. We always suggest you download copies of these things. Keep them in a safe place. It doesn’t have to be on paper as long as they’re in a secure location. If you’re downloading them, you have them at your fingertips whenever you need them. And you’re not relying on trying to retrace your steps or get people to give you things if you no longer are working with them.
Tips to Keeping Finances Organized
We went through quite a bit of tips to keeping your finances organized. Pick a method and stick with it. Download your statements once a month so that you have all the information. Make that master list for yourself as well as anyone else who may need it in the event that something happens to you.
For more information about organizing your finances, taxes, and other accounting information take our free masterclass for small business owners below.
