As we move along in our business doing the things we love to do best, but with running a successful business there are many moving parts. As soloCEOs we often have so many things to take care of that it can be really easy to lose track of where our money is going.
Proper accounting and budgeting for your business is a must! Keeping track of all your income and expenses, will help you eliminate unnecessary spending and will give you clarity on what’s working and what’s not. Accounting and budgeting plays a very important role in our financial lives, as it instills discipline, allows you to track and forecast areas of strengths and weakness as well as prepare you for your businesses tax returns. Here are 3 things having a budget for your business will do for you:
1. Instill Discipline
Let’s be honest…without a strict budget, most of us would just spend, spend, spend, as if our money will never end and for those of you reading this who don’t already or didn’t always budget your spending, you probably know exactly where I’m coming from. Discipline is something that we need in every aspect of our lives, but especially as it pertains to money. If someone were to give you, let’s say, $10,000, would you have a plan or budget on how to spend or invest it? Or would you just spend it aimlessly? We all want a substantial amount of money, especially to invest in our businesses, but the truth is, most of us wouldn’t really know how to utilize it effectively.
2. Tracking and Forecasting
As a business owner, keeping track of your income and expenses allows you to make wise decisions. If something is becoming too much of an expense based on your revenue, with clear accounting records, you can easily forecast the need for change and make the adjustment to lessen the budget for it. The budget that you set should be based on your revenue. I’m sure you know that your revenue should greatly outweigh your expenses, but if you’re not keeping track of where your money is going and coming from how can you know what your profit margin looks like? How would you know what to spend less or more on?
3. Tax Preparation
Whether you’re recognized by the IRS as an individual or a business, depending on your income, you are required to file a yearly tax return and if you collect sales taxes as a business, you’re required to remit those taxes to the state either monthly or quarterly. With a clear track record of your income and expenses, filing tax returns are seamless.
So when you instill discipline, tracking, forecasting and preparation into your businesses daily and monthly life-cycle you are sure to increase your potential for revenue. Allowing you to concentrate more on your marketing to capture more client leads.
Marsha Guerrier is a bestselling author, speaker, trainer, business analyst, business coach, and CEO of HerSuiteSpot®, a MWBE and SBE certified small business consulting and coaching agency that provides online and in-person support to early stage female founders looking to accelerate their business.