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For small business owners, managing business funds well is important to keep things going, and it helps when making decisions. If you don’t pay close attention to your finances, you may lose important tax deductions or create more problems along the way. There are a few ways you can get organized.
Save Money on Fleet Costs
Having a fleet can be expensive, so finding ways to reduce the costs can help you make some of that back. One option is to upgrade your fleet to electric vehicles. They don’t use as much energy as gasoline or diesel vehicles, and you will be able to save on fuel costs. If you are thinking of going this route, you can review a guide with more information on charging and how you can get the most for your range.
Focus on Your Credit Score
Your business credit score is separate from your own, and it impacts everything from your ability to get contracts to the amount of money you will pay in insurance rates. It’s important to keep an eye on your company’s credit report and build it up if it’s not that high yet. Use your business number to apply for credit accounts or credit cards and make sure you pay on time. This will show credit bureaus that you are a reliable company to work with. Not every company will report your payments to credit agencies, so if you find some payments have not been counted, try to get these submitted in your credit score.
Plan Your Taxes
Same as you have a personal finance plan that includes filing and paying your taxes, businesses need to pay income taxes on the money they earn, although this is separate from the taxes you will pay on your personal income from the business. The way you need to pay these taxes will depend on the structure of your business. It’s important to be setting aside some income every month so you have enough money to make your estimated tax payments. You typically need to make an estimated tax payment every quarter but check on the regulations in your area.
Keep Personal and Business Money Separate
It may be tempting to use your own credit card to pay for business expenses, and you may be tempted to put your business income into your own checking account. However, this can lead to big issues down the road. If you are deducting business expenses from your income, like supplies or travel, you will need to make sure you have documentation to support these expenses.
If you are audited and the IRS finds you do not have documentation on what was for your own use and what was for your business, you may not be able to take any deductions. You can avoid this issue by setting up a separate account that is used only for your business funds. Many offer unlimited transactions and free checks, which will help you get started. You can also pay yourself a small salary instead of putting the revenue directly into your account. Of course, the way this works will depend on your business’s structure.