Today’s blog post is a special treat! I am pleased to bring you a powerful interview about small business finances from my good friend, Stephanie Pickens Britton aka Ms. Money Savvy.
Thanks, Ms. Money Savvy, for spending time with us and for your very generous offer at the end of this interview. I encourage you all to visit Ms. Money Savvy for more tips about how to keep your business finances in order.
Enjoy the interview!
Coach TC
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Coach TC: What’s your definition of a financially “successful/healthy” business?
Ms. Money Savvy: A financially healthy business is one that has sufficient financial resources (able to meet all financial obligations), has a healthy cash flow, controlled spending and the ability to collect money owed.
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Coach TC: I work with lots of clients who what to know what they should do first. What are the first 3 things new business owners should do regarding finances?
Ms. Money Savvy: The first thing a new business owner should do is determine which type of business entity is best for their business. For someone selling a simple product, a sole proprietorship may suffice. If you’re offering services, you may want to consider a limited liability corporation (LLC). This limits your personal liability. For more complex businesses, an S-corp or C-corp may be in order.
The second step should be to create and maintain total separation of your personal and business finances. This means getting a business checking account and a business credit card, if necessary. This protects you as an individual as well as ensures that there are no questions as to eligibility of business expenses/deductions when it’s tax-time.
The third, and possibly most important, step is to make sure you’re properly insured. You want to be sure to protect both your business and yourself. This may be errors and omissions (E&O) insurance for your business and umbrella insurance for yourself as an individual.
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Coach TC: Bookkeeping is another concern that comes up often. What should small business owners know about bookkeeping?
Ms. Money Savvy: The type of business you have will determine how complex your bookkeeping is. For some, a simple ledger system may be sufficient. However, if you have numerous suppliers and/or invoices to keep track of, you may want to consider financial software. There are many good software program s out there such as QuickBooks and Peachtree Accounting. If you have payroll or other tax issues (such as issuing 1099s), you may want to retain the services of a financial professional.
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Coach TC: What should small business owners know about profit & loss statements and cash flow?
Ms. Money Savvy: Cash flow is one of the most important things in small business. You do not want to be in a situation where you can’t pay suppliers or employees. Profit and loss statements, as well as balance sheets, give you insight into the health of your business and can highlight areas that may need improvement. If you use financial software, these reports can often be generated with little effort.
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Coach TC: Tell me more about your blog Ms. Money Savvy and how it can support small business owners.
Ms. Money Savvy: While Ms. Money Savvy is a personal finance blog, personal finance applies to business owners as well. I try to discuss issues that are relevant to a wide variety of people. Just recently I posted a list of retirement plans for small business owners. While some financial issues are applicable to all, business owners have a unique set of circumstances. Unfortunately, there are not as many sites or resources to address these issues. Therefore, I make an effort to do that on my blog.
If someone has a question about something that I have not addressed, I am more than happy to do some research and answer that question.
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Coach TC: That is fantastic. Thanks, Ms. Money Savvy for your generous offer. Do you provide any direct consulting and/or financial planning services?
Ms. Money Savvy: I do provide consulting and financial planning services on both an individual and small business level. For more information, you can view my website www.s2fc.com
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Coach TC: Many thanks for your time today and for being so generous in sharing information. I’d like to encourage all of our readers to check out Ms. Money Savvy for more great tips on how to managing your business finances for accelerated success.
Ms. Money Savvy: Coach TC, thank you so much inviting me to share a bit of savvy money tips with your readers. I would love to make myself available, free of charge, to answer any questions they may have as it relates to this post. Thank you again.
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