A tricky part of managing a startup is figuring out how to manage and partition money. While many famous examples of successful startups have gained publicity for burning through cash, the far more likely reality is that your company will be carefully managing funds to maximize output. But figuring out how to do this while working through all of the other complex tasks necessary for smooth startup sailing is not easy. A financial expert in Fort Myers, Mike Hainsworth gives three distinct tricks for managing your business’s money in transparent, easy-to-follow ways.
1. Constantly update financial projections
When you first created a business plan for your startup, you may have created a simple set of 1-year and 5-year financial projections. But as time progresses, it becomes easy to merely glance at those projections and move on with your day. This isn’t conducive to a growth mindset, as it simply reinforces goals you set in the past. A more helpful approach is to set aside time every week or month to update those financial projections. This method will help you constantly reevaluate your startup’s priorities, whether that means you increase spending to match investor expectations or seek out new capital to fund future projects. You’ll also be able to revise financial goals and keep your vision on track. The most important outcome of consistently updating your financial projections is the ability to keep a firm grasp on the current financial state of your company.
2. Keep track of tax break opportunities
There are many tax breaks at the federal and state level that small business or startup owners aren’t aware of. For example, a log of your car’s mileage when dealing with business matters can help you accurately deduct car-related expenses during tax season. There are similar tax breaks for other costs associated with small businesses like technology and large equipment purchases. Be careful with these tax break opportunities, though. Without a careful log of details involved in these expenses, the IRS will penalize you during an audit.
3. Contact professionals after hiring
Money management becomes infinitely more complex the second you hire an employee. Not only do you have to plan a salary and benefits for that employee, but you also need to calculate tax withholding and report both salary and withholding to the government each and every quarter. The paperwork for reporting this and for filing taxes is almost endless and can feel unnecessarily complex and time-wasting for those without experience. That’s why nearly every founder recommends hiring a business tax professional at this stage since he or she will have more than enough experience to properly deal with these issues. It’ll also free up your time as a founder, as the tax professional will only need your assistance at the beginning of the process and during the final steps. It may feel a little strange at first to relinquish some control on finances to someone outside of the company, but in the end, will free up your time …Read more