Keep it simple, keep it consistent, and you will find that effective money management for your small business is not that difficult. In the beginning, following four basic practices will save you time and trouble and help to seal your success. Here is what works for many new entrepreneurs:

#1) KEEP IT SEPARATE.

Free small business checking and savings accounts are standard now at many banks. On day one, open both for your small business, and do not mix your business and personal accounts. If you take money out of your small business account for personal needs (that is why you created the business, right?), label it as a draw or a pay-yourself item in your check register. Put at least a third of every dollar you make into your small business savings account and don't touch it until it's time to pay your taxes.

#2) KEEP RECEIPTS.

Anything you buy for your small business, including gas and travel expenses, save the receipt. An easy and cheap way to do this is to buy a paper accordion file with a string closure and just save the receipts in it as soon as you get them. You can create categories if you want, but it isn't necessary. On the back of any receipt that isn't self-explanatory, jot down what the purchase was for and put it in the file.

#3) KEEP A SIMPLE LEDGER.

If you are familiar with Quicken, Quickbooks, or other money management software, go for it. Many great programs exist to help you manage your small business receipts and expenditures. But don't think you have to learn a new computer program to start your business. A simple ledger will work just fine, and you don't need a course on that either unless you want to take one. In the far left column your write the the date, and then you move to your write and record the amount under income or expenditures. That's it. Seriously.

#4) HIRE & KEEP A GOOD ACCOUNTANT.

I know some of you are thinking, why should I pay money for an accountant? My business is small and I don't have a lot of money to waste. Why can't I do it myself? The answer is, you want to be spending your time and energy on growing and perfecting your business, not on learning accounting. A good accountant is worth every penny and then some. She can give you tax saving tips. She can keep you out of trouble legally. She can direct you on what to do next when your business starts to grow so that you maximize your profits. Last, but my no means least, she can do your quarterly taxes for you, thereby removing an enormous source of stress from your life. She will ask for your checkbook register, your ledger, and your accordion file with the receipts, which you already have because you followed suggestions #1, 2, and 3.

That's it! To be sure, a lot of other topics are relevant here: your business plan, your short and longterm goals, investments, IRAs, and so forth, but in the beginning, just getting the basics down will establish good money management habits and free you up to grow your business and focus on your passion. Give yourself a big money management KISS-"Keep It Simple Sweetie"-and you will take a giant step toward small business success and satisfaction.

Learn more about this author, Pamela Grundy.
Click here to send author comments or questions.

---

Add your voice

Know something about Money management and your home business?
We want to hear your view. Write now!