Business Skills: Practical Knowledge for Business Leaders and Entrepreneurs

Chapter 1: Money Management Abilities That Every Small-Business Owner Should Have

To start, here are some crucial abilities to manage cash, and this is what makes or destroys a business.

1. Adhering to a Budget

Small companies are the heart of our economy-- making up 99 percent of United States company companies, according to Babson College. And even though your most essential job as a small-business owner is to help your clients, developing some business financing knowledge is vital, too. Increasing your financial literacy is simpler than you think, particularly when you use budgeting software application to help.

At the heart of every effective business is the capability to budget. Understanding budgeting fundamentals, which includes how much money you're making and spending monthly, is definitely vital for evaluating the health of your business. On a definite basic level, month-to-month budgeting helps you learn if you're making a profit -- and if so, how much. Plus, it helps to track client spending routines from month to month and year to year. Budgeting is also vital for measuring the effect of your business decisions. If you're not thoroughly tracking your finances, there is no other way to know whether a previous decision led to a profit or if it had a negative impact on your bottom line.

2. Setting Realistic Objectives

Speaking of objectives-- successful small-business owners know how to set the right ones. In fact, your goals should specify, quantifiable, attainable, results-based and time-limited. Simply put, this implies using your present budgeting information to set monetary goals customized your business.

3. Tax Reductions

If you are a startup or solopreneur, it's all too simple to run your business from your personal checking account. This causes confusion when you're trying to measure business revenue and expenses separate from your personal financial resources, which could cause trouble at tax time. Without separate accounts, the IRS could deem your business more of a pastime, nixing your ability to declare some tax reductions, like home office expenditures.

4. Keeping Documentation and Receipts

While record-keeping might not be the most exciting aspect of owning a small business, it is an important one. You'll really need to keep a record of each transaction-- particularly the ones that you prepare to deduct as business expenditures-- so as to have all of the paperwork you really need come tax time. This is true for all apparent business-related expenditures, like energy costs and office rent, and all office expenses you prepare to claim on your taxes.

5. Working Together on Financial Management

Even if you are a solo-preneur or sole founder of your business, you don't need to process all your monetary info alone. Usually, you'll want to collaborate with business partners, financiers or contractors (like accountants) to look at your business' monetary information to make decisions about the future or simply to make tax time a little much easier.

Chapter 2: The Basics of Money Management

Making money and finance can be tricky business simply because, in addition to consumers, cash flow and handling your accounts properly is what keeps your business humming along. Consequently, earning money in full and on time, as well as comprehending money management, needs to become a top priority, even if you elect to work with an accounting professional or accountant to manage the books. You'll still need to acquaint yourself with standard bookkeeping and money management principles and activities such as comprehending credit, reading bank declarations and tax forms, and understanding balance dues and payable. You also have to give mindful consideration to the purchase payment choices you offer customers, including money, checks, debit cards, credit cards and online payment choices, as well as developing payment terms and money debt collection in the event of nonpayment.

Opening a Bank Account

When you've chosen a name and you've also registered your company, you're going to really need to open a commercial bank account. Establishing a firm bank account is easy. You can begin by selecting the specific bank that you prefer. And think small-business-friendly; first call up to set up a consultation to open an account. There's