For as long as I’ve run my business, I’ve always struggled with keeping track of my financials. This has led to major challenges in growing and keeping it. I’ve put together this guide not only to help you, but to provide a guide for myself as I navigate to the next chapter of the growth of my business. The goal of this guide is to answer every question and provide step-by-step solutions to challenges I’ve faced.
Why Managing Your Financials Matters
Keeping track of your finances isn’t just about knowing how much money is coming in and going out.
It’s about:
- Planning for growth
- Avoiding cash flow issues
- Qualifying for loans or grants
- Attracting investors
- Staying compliant with taxes
If you’ve been running your business for years but haven’t kept up with your financials, don’t worry—this guide will walk you through how to get organized, step by step.
Step 1: Start with the Basics
1. Separate Personal and Business Finances
If you haven’t already, open a dedicated business bank account. Keeping personal and business expenses separate helps with:
- Easier tax filing
- Tracking income and expenses accurately
- Building business credit
2. Track Your Income and Expenses
You don’t need fancy software to get started. Use a simple spreadsheet, notebook, or free app like Wave Accounting or QuickBooks Simple Start.
How to do it:
- Write down every sale or payment you receive.
- List every expense, even small ones (office supplies, internet, etc.).
- Save receipts and invoices—either digitally or in a folder.
Step 2: Create Essential Financial Documents
1. Income Statement (Profit & Loss Statement)
This shows how much money your business made and spent over a period of time. It helps you see if you’re profitable.
- List all revenue (sales) at the top.
- Subtract expenses (rent, supplies, etc.).
- The difference is your profit or loss.
2. Balance Sheet
A balance sheet is like a snapshot of your business’s health. It shows what you own (assets), what you owe (liabilities), and what’s left over (equity).
- Assets: Cash, inventory, equipment
- Liabilities: Loans, credit card balances
- Equity: What’s left after subtracting liabilities from assets
3. Cash Flow Statement
This tracks how money flows in and out of your business, helping you avoid running out of cash. It breaks down into:
- Operating activities: Day-to-day income and expenses
- Investing activities: Buying or selling equipment
- Financing activities: Loans, repayments, etc.
Resource: Cash Flow Template (Excel)
Step 3: Set Up a System
1. Use Accounting Software (or Free Tools)
If managing financials manually feels overwhelming, try software that automates the process. Options include:
- Free: Wave
- Paid (but affordable): QuickBooks | Xero
2. Schedule Weekly or Monthly Check-Ins
Set aside time to review your financials:
- Update your income and expenses
- Reconcile your bank account
- Review invoices and payments
3. Hire an Accountant or Bookkeeper
If you’re too busy or feel overwhelmed, hire someone to help—this is an investment in your business’s growth.
Resource: Find a Certified Accountant (AICPA)
Step 4: Prepare for Taxes and Funding Opportunities
1. Stay Tax-Ready
• Keep track of receipts and categorize expenses for deductions.
• Pay estimated taxes quarterly to avoid surprises.
Resource: IRS Small Business Tax Guide
2. Get Funding-Ready
To qualify for loans, grants, or investors, you’ll need to present your financials. Having organized documents (profit/loss statements, balance sheets) shows that you run a serious business.
Resource: Small Business Loan Checklist (SBA)
Step 5: Keep Improving
- Learn More: Take free online courses in finance and accounting. Coursera and LinkedIn Learning have great resources.
- Network: Join local business groups or online forums to exchange tips with other entrepreneurs.
- Review Annually: Look back at your financials at the end of each year. Celebrate your wins and adjust for the future.
Final Thoughts
Managing your business’s finances isn’t about perfection—it’s about progress. Each step you take brings you closer to securing funding, growing sustainably, and achieving your goals. You’ve made it this far, and with the right tools, the next chapter of your business can be even more successful.
Book a Consultation
Need support? Book a 1-on-1 with our founder to leverage 28+ years of experience. Save time, avoid mistakes, and get results.