If you’re like most business owners, you likely don’t consider finance to be one of your key responsibilities. However, a number of obligations go along with owning and running a business finance obligations that you may not have considered. Here are 7 of the most common:
- Paying taxes. Not only do companies need to account for federal, state, and local taxes each year, but they also need to pay payroll taxes, which fund Social Security and Medicare programs.
- Managing funds. Investors need to know that the money they invest in a business is being managed well. If an investor wants to get his or her money back, he or she will want to see a steady profit from the company and projections of future growth.
- Paychecks: Every week, employees should receive their wages promptly. If the company does not have enough money to cover the check, it may need to borrow from a financial institution or sell assets to cover the cost.
- Credit card bills: Many businesses use credit cards to borrow money. If the company cannot pay its credit card bills, it could face serious consequences such as losing customers and potentially going out of business.
- Property taxes: Tax season is an important time for businesses to pay their property taxes.
- Accounting and bookkeeping: Businesses must keep accurate accounting records to comply with Generally Accepted Accounting Principles (GAAP). This includes recording revenue and expenses, as well as making sure all transactions are correctly recorded. Failure to do so can result in penalties from the IRS or other government agencies.
- Payroll: Employers are required by law to withhold taxes from employee paychecks and send them directly to the IRS. Failure to do so can result in hefty fines from the government or even criminal charges.
The Best Ways to Reduce Your Business Expenses
When starting or expanding a business, it can be tempting to focus on the exciting new features and products your company offers. However, neglecting to take care of the basics can quickly lead to hefty business expenses. Here are some everyday business finance obligations that you may not have considered:
- Keeping accurate records: Without accurate records, it’s difficult to stay on top of your finances and make informed decisions about investments and marketing strategies. A good system for tracking expenses includes a spreadsheet or journal and online tools like QuickBooks or Mint.
- Setting up proper billing and invoicing: Proper billing and invoicing help track expenses by category and makes it easier to analyze financial data to make intelligent business decisions.
- Setting up an automatic payment plan Automated payments help you pay your bills on time and avoid late fees, which can be costly.