Your coaches have some advice for you.
If you own a small business, it’s extremely important to effectively manage the money in your business.
That’s right. After all, no matter how many sales you make, to have a profitable business — one that pays you for your time and effort — you have to be a good money manager.
There are three basic money management tools you need to put in place: a business banking relationship, a bookkeeping system, and monthly management reports. In this lesson, we’ll tell you about each one.
So let’s start with business banking. Most banks offer products and services that are designed specifically for small businesses. Money management is an area where banks can really help you.
Banking on the Internet is one of the most useful money management tools a small business owner or manager can have. “Time is money” in business, and managing your money online can be a tremendous time-saver. Online banking is safe and convenient: you can monitor your account activity at any time, check your transactions and balances, transfer funds between bank accounts, and pay bills.
Business checking accounts are similar to personal ones. They make it easy for you to access your money and to transfer money between accounts. By having a business checking account that’s separate from your personal one, you can clearly see how your business is performing and how much cash you have on hand. It will also be quicker and easier to fill out your tax forms.
Many banks offer accounts that let you write checks and use online banking and automated teller machines, or ATMs.
Some banks offer special ATM cards that allow the business owner to control how the ATM card can be used by employees. For example, a bookkeeper could make deposits but not have full access to the business’ money.
Ask your local bank about the different kinds of business checking accounts they offer.
Just as with a checking account, many small businesses have a business savings account that’s separate from their personal one. With savings set aside, you’ll be able to handle emergency business needs. You can plan ahead for making large purchases in the future. You’ll be ready to pay your business’ taxes when they’re due.
At most banks, your business savings account can be used as overdraft protection for your business checking account. This can save you money on bounced check fees, and help keep your credit strong.
Also, when you put your money in a business savings account, the bank rewards you on a regular schedule by adding interest that makes your savings grow.
Paying your employees — and keeping track of what you pay them — can be complicated and time-consuming. Payroll tax laws change frequently. As an employer, you can be charged penalties if you don’t keep up with the new laws. A payroll service can make the entire process of paying your employees, and keeping track of what you pay them, faster and more convenient. The payroll service provider also takes responsibility for following the current payroll laws — and paying any penalties if they make an error.
Many banks offer payroll services. Ask your local bank for details about what they provide and how much they charge.
To learn about credit-related tools for small business, click the Next button.