A small business starts out with a great idea – a product, a service, or a particular expertise – and a driven organizer. However, having a great idea is very different from running a business, and an organizer might find himself spending more time running the business than executing his idea. It can be very frustrating to sacrifice time and energy into the business side, instead of promoting the great idea.
Taking just a few minutes each week to run your business efficiently can maximize earnings and make things simpler at tax time. Here are just a few ideas for taking care of your business, even if you’re not a business maven.
- Issue invoices promptly. Clients and customers sometimes have short memories. They might remember work you did for them a few days ago, but forget work you did a few months ago – and worse yet, might refuse to pay or demand a discount. Getting invoices out closer to the time the work is finished can sometimes result in a better rate of return for the work.
- Keep receipts. Keep receipts for office expenses that you pay out of pocket, whether they be marketing, rent, supplies, or equipment purchases. Also, keep track of your travel costs – the site http://www.irs.gov/2014-Standard-Mileage-Rates-for-Business,-Medical-and-Moving-Announced (last visited October 27, 2014) offers the 2014 IRS rate for travel costs. These costs may be reimbursable on the company’s earnings, and might be payable before the end of the tax year.
- Open a tax escrow account. Here in Philadelphia, business owners may be responsible for Federal, state, and several types of City taxes – including net profits, business privilege, and wage taxes. In order to ensure that all obligations are covered, consider opening a tax escrow account and ensuring that at tax time, there is enough to cover all taxes.
- Create a balance sheet. A balance sheet will let you track the business’s revenues against its overhead. Banks or other funding sources often demand to see balance sheets before lending money. Over time you’ll be able to track your business’s growth and predict future earnings, anticipate when to replace equipment, and determine whether to hire personnel.
Having your own business can be immensely rewarding, and with a bit of forethought and attention, perfecting and promoting your great idea can take precedence over running the business. If you have questions, feel free to give us a call so we can help your business bloom.