Organizing your business finances

Organizing business finances can take up 20 hours of your time each week. For most business owners, this is 20 hours that they just don't have. This article will discuss some easy things you can do to organize your business finances:

Organize your office
To avoid late payments and over drafted accounts, you need to have an organized filing system. Keep your office clean and free of clutter to help avoid any confusion. Keep a file of all your paid bills and file for your un-paid bills. Organize the un-paid bills in order of their due date. Set up email notifications or text message reminders when it is time to make the payment. At the end of each year, go through your files and shred all the old receipts and bills that you no longer need for taxes. Only keep records for 3 years for the IRS. Your bank will keep online bank records for 7 years in case you are audited and the IRS needs more information.

Another simple way to stay organized is to make sure all of your employees know exactly where the new mail goes. Having a single bill misplaced and missed can hurt your business credit rating. Try to open your mail on a daily basis so you avoid getting a large stack of documents in one area.

Pay on time
Missing a single payment can cost you around $40 or more a month and it hurt your business credit rating. Paying your bills on-time is not that difficult. Quicken and other programs have systems that allow you to input your bills and they will notify you when they are due. You may even be able to establish automatic bill pay through Quicken or another financial program.

Check the payment terms so you know how quickly you need to send in the payment. With loans and credit cards, send in the payment as soon as possible so you don't pay as much money toward interest rate each month. Always review your statements each month to make sure there are no hidden charges or unexpected expenses.

Software
One of the best investments you will make for your business is to use an accounting software program. Quicken works great for sole proprietorships or smaller businesses but you should consider upgrading to its sister program, QuickBooks, for larger businesses. Good accounting software will manage all of your invoices, receivables, payables, payroll, tax reporting, and inventory tracking. Using accounting software programs can help you avoid hiring an accountant to do your taxes at the end of the year. All you need to do is review the information and then efile it.

If you don't have time to spend inputting data into the program, train one of your current employees to do it or consider hiring a part-time bookkeeper. As stated above, it takes about 20 hours or more a week to organize your finances.

One of the nicest features about accounting software is you have the ability to print checks and they will automatically be recorded into your checkbook. Some software programs also talk to your bank on daily basis to reconcile your accounts. This will help you understand exactly where you are at with cash-flow.

Cancel old accounts
If you have old business credit cards, consider cancelling them. Unused accounts are prime targets for identity theft especially if you do not review your account often. If you aren't actively using the account it is actually causing your business credit score to lower. Cancelling the account will have an immediate impact on your credit score and you can see it jump by a few points in a month.