You’d think it would be so simple. Stick to business with business and keep personal out of the way.
But when it comes to owning your own small business, especially if you work from home, it is so easy to get off track. It’s as easy as running out of printer ink and dashing to the store. In a hurry, you pay cash instead of using your company card and dash back home. It’s another expense that could help offset taxes. Now only if you remember to take business funds to pay yourself back and you remember to record the transaction and the receipt. It probably won’t happen. Most likely, you’ll sigh and promise to make it right next time.
Creating some rules for your company—which also means for yourself— is a wise strategy. It can help you manage your budget and business security. Here are three to start with.
1. Create a Cash Plan
It’s easy to manage big purchases or regular bills with online payments. It’s the old nickel-and-dime purchases that get you in the end—the trips for office supplies, picking up snacks or making an impulse buy that might find you dipping into personal funds. You grab your own cash or a personal debit or credit card and make a transaction. Once or twice isn’t so bad, but it won’t take long and you’ll be quite tangled up. It can also happen in reverse when you grab your business funds and accidentally buy groceries or other personal purchases.
Try these tips for keeping funds separate:
- Organize your wallet. Place your business cards in a separate section to visually separate them.
- Label your cards. You can make a note with a permanent marker or add a sticky note to the front with a reminder such as “Business only!”
- Purchase gift cards. Stock up on gift cards for stores where you often pick up supplies. Use the gift cards whenever you visit to keep you from dipping other funds.
- Keep a small supply of work designated petty cash at hand. This will keep you from using personal funds for work things.
2. Protect Your Funds
Avoid losing track of your expenses. Use these tips to keep a close eye on your business funds.
- Prevent loss. Do not hand out cash or valuable credit cards to errand runners or employees. Keep gift cards for this purpose. This limits transactions to the value of the gift card and prevents them from pocketing cash or using the company card for personal expenses.
- Keep your cash locked up. Don’t share the access with everyone.
- Guard your cards. If you do have employees using credit cards, don’t allow them to share the card. Instead, order extra cards so each person has an assigned credit card number. This way, you’ll always know who to talk to about a questionable purchase, as the bill will show you which card was used.
- Do keep receipts and tally expenses. Even when the expenses are small, they add up over the course of the year and can affect your bottom line.
3. Take Security Steps
No matter how small your company, even if it is just you, there are security measures you need to take.
- Shred it. Keep up to date on shredding papers. The best policy is to shred as you go. If you have a lot of paperwork, outsource a shredding company to pick up your old paperwork on a regular schedule.
- Be smart about passwords. No matter how many times they are told not to, people still use easily guessed passwords like the word “password.” Break out of the habit and make sure your passwords are hard to crack. Use a combination of upper and lower case letters, numbers, and characters. Don’t duplicate ones you use personally. If someone hacks into one account, it will be easy for them to figure out to use that password for other accounts. Change them frequently.
- Get extra eyes. Guard against financial or bookkeeping mistakes, which can be costly. Don’t wait until year end to have your accountant or CPA look at the books. Have a quarterly review to make sure you are on track. It’s much harder to make a year’s worth of corrections!
- Guard information. Assign separate usernames for each employee so you’ll be able to track who has accessed information.
- Back up your documents and data. Make sure you back up off-site. If you have an extra hard drive in your home office, it won’t do you much good during a tornado, flood or fire. Backing up to the cloud is a good disaster plan.
- Stay safe. Malware and virus protection are essential business investments.
- Watch out. Be careful not to transact business on public Wi-Fi.
- Be IT savvy. One of your best investments is to develop a business relationship with a tech expert. Keeping your information and company as secure as possible is one of their goals.
There is always a risk in owning your own business. Being successful is all about how well you manage that risk.
About the Author:
Lea Schneider has owned her own small business and currently writes on small-biz organizational topics for The Home Depot. If you are currently considering using gift cards as a way to manage expenses of contractors and employees, you can review Home Depot gift cards here.