Whether you’re just starting or are a seasoned entrepreneur, keeping your finances organized can help you see the best days of your creative business. Most creative businesses face irregular client and cash influxes, making tracking and managing finances difficult.
However, by developing a strong strategy for your business finances, you can determine the best techniques for minimizing costs, preparing for taxes, and planning for the future. Below are four practical tips you can follow to keep your creative business financially organized.
Work With a Realistic Budget
Creating a business budget follows the same principles as creating a personal budget. You want to ensure you’re spending only what you’ve earned and borrowing only to create wealth. Lack of a budget can lead to overspending and drowning in expensive debts that might kill your business.
As a creative business owner, you may not want to start spending a lot on expensive subscriptions, insurance, salaries, employee loans, and other expenses. You can start small and increase allocations to such expenses with time as your business becomes more profitable.
Distinguish Credit Card Transactions
If you’re just getting started handling your business finances, using the same depositing account for business and personal transactions is common and tempting. This might be convenient initially but will lead to serious financial disorganization in the long run. You’d want to have a separate account for your business so you can track when monies come in and leave the account for easy recording.
Having a business credit card also helps you develop a good, separate credit score for the business, which is important for acquiring business loans. If several employees use the business card to transact, you can make the process more secure by incorporating a credit card scanner app. The app notifies you in real-time anytime a payment is made for your efficient record keeping.
Draft Contracts to protect Your Money
As you build your brand into a recognized household name, you may have to settle for one-time freelance roles that come your way. While these freelance opportunities are crucial for maintaining a continuous cash flow, they sometimes come with substantial financial risks. You need to draft a binding freelance contract to ensure you get paid all your money within the agreed period.
A strong contract should outline everything important for the project’s success. This can include timelines, payment details, client expectations, and the legal implications of failing to abide by the contract’s demands. Clients are also more likely to take your business seriously when they see how organized and professional you are.
Review and Audit Your Business Regularly
Since you’re not working alone, and delegation is good for growth, you may not always be aware of everything going on in your business. That’s why you must schedule regular audits and reviews to keep tabs on your business’s financial updates.
Regular reviews and audits of your business finances help you identify areas that need prompt improvement early before they get out of control. You can hold monthly reviews of your money if you already have systems for tracking cash flow. If not, you’d need more frequent reviews to ensure a consistent cash flow and a healthy circulation of resources.
Effective financial management is one of the most challenging roles in any business. If you’re running a creative business, these tips can help you get the best of your finances and reinvest wisely for expedited business growth.
