As a small business owner, keeping your business financially healthy is critical. The COVID-19 pandemic showed many businesses just how little can stand between huge success and major financial trouble. While there might not be another crisis for many years, planning ahead can help make sure that the financial health of your business is good in the event that a negative surprise occurs. How can you keep your business in great shape?
5 Tips for Maintaining the Financial Health of Your Business
- Master your basic financial numbers. Even if you work with MKS&H to handle your taxes and other details, there are some numbers that you should always have an eye on to make sure that you understand the financial health of your business. Some of the numbers that you should have a firm grasp of include expenses, revenue, payroll, overhead, assets, equity, cost of goods sold and liabilities.
- Always maintain consistent, timely billing practices. This aspect of the financial health of your business is easier when you work with an experienced accounting partner like MKS&H. Make sure that you have formal systems in place to create invoices, send them to clients and complete the billing process as seamlessly as possible.
- Just like you want to invoice clients properly, you should also make sure that you pay your invoices promptly. Late payments can make it even harder for you to maintain the financial health of your business, as you will often need to pay late fees or penalties and can jeopardize your relationship with your vendors and partners.
- A rainy day fund is essential for both individuals and businesses, and the COVID-19 pandemic is proof. An emergency fund can keep your business afloat when things like inflation or a crisis take a toll on your bottom line, and it can provide you with immediate funding while things like the PPP loan or bank loans can take weeks or months to land in your account.
- Always keep your personal funds and business funds separate. If you keep your money together, it is much more complicated to file taxes and it can be more challenging to see the financial health of your business.
Improve the Financial Health of Your Business with MKS&H
MKS&H provides tax and accounting services to businesses of every size and in every industry. We can work with you to explore the many options for your business and help you protect the financial health of your business. Contact us today for a consultation.
About MKS&H: McLean, Koehler, Sparks & Hammond (MKS&H) is a professional service firm with offices in Hunt Valley and Frederick. MKS&H helps owners and organizational leaders become more successful by putting complex financial data into truly meaningful context. But deeper than dollars and data, our focus is on developing an understanding of you, your culture and your business goals. This approach enables our clients to achieve their greatest potential.