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18 tips to manage your small business finances

Want to get finances under control in your small business?

Knowing the state of your financial affairs back to front is one of the best ways to make sure the cash keeps flowing. Staying on top of your finances means avoiding unforeseen business debt and having enough money to invest in and grow your business.

Stay on top of the day-to-day money management

  1. Properly manage your accounting. Hire a good bookkeeper or purchase DIY accounting software. It’s crucial that you keep accurate track of your income and costs.
  2. Review your costs. Keep track of all of your small business expenses. These can add up quickly, but reviewing them allows you to fine-tune where your money goes.
  3. Make financial projections. Having clear financial projections is important. Your main business plan will help you to anticipate and address possible future obstacles.
  4. Don’t get stalled on invoicing.
  • Send out invoices as soon as possible after providing goods or services.
  • Set payment terms of seven days to make sure that payments are not forgotten or lost in the process.
  • Always follow up on sent invoices. Make this easy by creating set templates for email or SMS follow-ups.
  • Reference invoice numbers and cross-reference these with payments.
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Separate business, pleasure and private accounts

  1. Keep a separate business bank account. Mixing business money with your personal finances is a recipe for unexplained losses and tax-headaches. Keeping your business’s money separate will make gauging profitability easier and help you to keep proper track of your expenses.
  2. Keep track of personal loans to your business. Keep accurate records of what you loan to your business. When your business starts making money, pay back the director’s loan first before paying tax on the remaining profit.
  3. Use a business credit card. You’ll want a business credit card for making your business-related expenses. This helps keep your personal purchases wholly separate from business purchases. Plus, some business cards may offer rewards for business-related spending.
  4. Make sure to pay yourself first. This doesn’t mean sucking up all the profit the moment you make it — start with 10% of the earnings. This is a good way to set aside money consistently and to test your business’s profitability. It also provides a safety net for unexpected expenses.
  5. Remain frugal. Even though you pay yourself, don’t get sucked up in the benefits of business ownership even if you can afford it. Set your salary as low as possible and offer government-mandated benefits only. What you save now will give you more flexibility in future lean months.
  6. Keep travel costs minimal. Most hotel and travel costs should be spent on a place to simply lay your head at night and a way to get from meeting to meeting. Don’t overspend on luxurious travel and accommodation. This sets a bad precedent for employees and can be an unnecessarily large cost with little return. Plan your business trips as if you were paying for them yourself.

11. Don’t let legal fees get out of hand. A reasonable amount to pay per-hour for legal services is $450. How can you manage this cost?

  • Make your expectations clear to your lawyer when procuring their services.
  • Choose the billing option that is the most cost-effective for your business, for example, hourly or per project.
  • Ask whether it is possible to defer payment until the project is funded.
  • For the more simple necessities, consider DIY legal documents. There are various services available online.

12. Take care when expanding. Make sure expansion is done steadily and wisely. Pushing large amounts of money into expansions that are too quick and too drastic can be disastrous.

13. Take control of your own marketing and public relations. Follow a PR and marketing strategy to make sure efforts are intentional and focused.

14. Consider renting instead of buying. Leasing equipment instead of buying helps you avoid maintenance costs and can also prevent you from overpaying on equipment only needed for a specific period of time. Also, consider renting your office space to make relocation and expansion easier.

15. Don’t wait too long before seeking a loan. An easy mistake to make is waiting until your business is in financial trouble before applying for loans or other credit. This is exactly when you will be least likely to receive financing. Consider applying for a business loan when your financials are still in a good state. This way the loan can be used for expansion or as an emergency line of credit instead of rescue.

16. Make sure you have enough capital. Small businesses tend not to have enough capital to get themselves through the startup phase. To prevent this, have three months’ living expenses saved plus the amount you are expecting to need for the first three months’ business expenses. Plan as if you expect to receive no business revenue.

17. Don’t spend prematurely. Don’t go big on business cards, sign writing, marketing materials, cars or inventory before any actual revenue comes in — doing so can create a cash flow blockage.

18. Check if you qualify for the ERC tax credit. The ERC is a tax credit that goes into your pocket, not a loan that you need to repay. You may qualify for the ERC if you own a small business or tax-exempt organization that continued paying your workers from March 13, 2020, to December 31, 2021. If eligible, you can claim up to $5,000 per employee for 2020 and up to $7,000 per employee for each of the first three quarters of 2021.

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23 Responses

    Default Gravatar
    MarichuOctober 7, 2019

    How do I manage my small business canteen and store? I want tips.

      Default Gravatar
      nikkiangcoOctober 8, 2019

      Hi Marichu,

      Thanks for getting in touch! It’s helpful to know that our page shows how to manage small business finances in general however we don’t have a specific page showing tips on how to manage a small canteen and store. It would be a good idea to search the web for businesses that have succeeded in the same industry to help you get started on your chosen business venture.

      Hope this clarifies and best of luck on your business.


    Default Gravatar
    SycoJuly 21, 2019

    This is a token of appreciation.
    Thanks for the wonderful and insightful articel.
    Thank you .

      fayemanuelJuly 21, 2019Finder

      Hi Syco,

      Thank you for your feedback. Have a wonderful day!


    Default Gravatar
    NicksonMay 14, 2019

    Wow! I love everything about this. I have a small business and this information has taught me how to manage my business so well. Thanks very much!

    Default Gravatar
    yeetFebruary 11, 2019

    How could I run a small business and grow it into a large chain?

      johnbasanesFebruary 12, 2019Finder

      Hi Yeet,

      Thank you for reaching out to finder.

      Yes, this is a possibility, Most if not all of the big chains in the US started as a small business. You may want to check the history of these chains to know how they built their empire. Hope this helps!


    Default Gravatar
    DenisNovember 12, 2018

    I would like to know the meaning of DIY accounting according to your 1st tip to manage small business, please. Thanks.

      CharisseNovember 14, 2018Finder

      Hi Denis,

      Thanks for reaching out to finder.

      Basically, as a small business owner, you have two choices when it comes to managing your business finances: hire an accountant to do the bookkeeping for you or do it yourself (DIY) by purchasing an accounting software program that you can use for recording and reporting business transactions.

      With accounting software, accounting tasks are automated and human errors are also reduced, making it a great tool for any type of business. There’s a lot of accounting software solutions available for purchase online. You just have to evaluate which one best suits your needs.

      I hope this helps.


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