Financial Advice for Small Business from an Accounting Guy

Posted by on May 21, 2013

With 20 years of experience in the accounting field, I’ve become the the go-to guy on financial issues at Sain Associates. I enjoy it since I’ve worked with a variety of external clients and managed corporate financial operations for clients such as NASA, the US Department of Defense and the private sector.

Over the years I’ve seen a lot when it comes to accounting and know that it’s a huge topic to tackle. But there are some pieces of advice that can be especially helpful when it comes to small businesses.

Here are my top 5 tips.

  1. Have a formalized budget. This is something I’ve seen many small businesses miss, but it’s one of the keys to financial success. If you have a formalized budget, you know what expenses you need to plan for, like business taxes, and everything that goes along with that. It’s not just income taxes but also property taxes and licenses, state, local and city taxes. With a budget, you know when those are coming up, which is important because they may need to be paid at different times of the year. So it needs to be a year-round consideration.
  2. Taking on debt. Everyone talks about debt differently and has different opinions, but I think there are two really important things. When it will help operate the business more efficiently, lines of credit can be a good thing, so don’t be afraid of taking on debt in that situation. Buying assets is another type of debt you may consider taking on in the normal course of business. Since you’re acquiring something, you can pay off the debt as your asset depreciates.
  3. Insurance issues. The question here is when are you going to pay for it? If it’s due in August, are you going to save up to pay the bill in August or are you going to stretch those payments out and pay it year round? Corporate insurance (general liability or corporate liability) is usually one of the biggest line items in any small business budget. So paying for that and keeping up with it is really important.
  4. Anticipate everyday expenses. Sometimes people may forget about it, but it’s important to budget for everyday expenses, especially travel. You need to think ahead about things like when your company does the most traveling – summer or winter? I don’t necessarily suggest you do a travel budget per month, but know what you’re spending per year on average so you will know if you are behind or ahead of that curve.
  5. Better bookkeeping. You should be keeping up with all expenses on a weekly basis and monitor on a monthly or at least a quarterly basis how you are doing against your budget. Check to see if you’re ahead or behind, and see if there are any line items that don’t look right. The sooner you know about something, the sooner you can make adjustments. This is even more important if it’s a fixed or variable cost, because if it’s fixed, you have to pay it.  If it is a variable expense like travel or office supplies, you can adjust.

In the end, it all comes down to having a formalized budget and keeping up with it throughout the entire year. The more closely you watch it, the easier it will be to handle any issues that may come up.

Sain Associates, Inc., is headquartered in Birmingham, Alabama, with offices in Cullman, Alabama, Pulaski, Tennessee and Mandeville, Louisiana. Sain is a site engineering, traffic/transportation engineering and planning and land surveying firm with experience in more than thirty states.

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