Lending & Finance

 

01 18 2017

01 18 2017

Paying Bills and Covering Small Business Expenses

Managing business expenses isn’t easy. Taxes, utility payments, supplier invoices, store or facility maintenance, employee salaries and benefits are just some of the costs that small business owners need to stay on top of. Over time, it becomes easier to fall behind on payments or mismanage business expenses.

To help small business owners more manage their payments more effectively, here are a few essential pointers:

Avoid using cash

There are situations where it makes sense to pay bills in cash. For instance, Houston Chronicle contributor Al Bondigas advised that cash payments can make sense for smaller purchases, or if there is a sudden or urgent need for money. As a general rule, however, it’s in a small business owner’s best interest to make the majority of payments directly through a checking account, or even with credit. This helps to build a paper trail, which is important for later payment verification and future tax write-offs. Using credit and then making on-time payments is also a great way for small businesses to improve their FICO scores.

Keep business and play separate

In cases where there is a sole proprietor to a business, there’s a bit of wiggle room when it comes to keeping personal and company expenses separate. However, Entrepretunity contributor Eric J. Nisall highly recommended that wherever possible, small business owners draw a very clear line between personal and business expenses. In any event that there is overlap, Nisall suggested “Writing a check to yourself in the form of a distribution.” Muddling the line between person and business expenses can result in income tax liability shifts down the road, which can be a real headache – or if times are tough, much worse.

Consider automating your payment schedules

The topic of automation is somewhat dicey. The immediate benefit of signing for automatic bill pay is that you essentially eliminate the risk that you might miss a payment out of sheer oversight. This helps you to avoid late fees, simplifies management of overhead expenses and creates an opportunity to improve your company’s credit. However, it’s important that if you do this, you manage your company checking account more closely. Nerdwallet contributor Erin el Issa noted that automatic bill pay introduces the risk of account overdrafts or bounced payments, which will do much more harm than good in the end. Not only will you have to pay late fees, you may also be met with overdraft fees and other headaches.

Take out a small business loan

At some point, every business has needed – or will need – to tap into an immediate source of capital with the help of an alternative lender. Whether this need arises in response to difficult times, or as a way to manage future expenses in response to a growth opportunity, there are are plenty of lenders that can supply the quick injection of capital that your business needs.

Again, managing business expenses isn’t easy, but with a little bit of help from the right alternative lender, it can be easier for your small business to find a way forward.

Featured


  • Future proof your business

    How to Future-Proof Your Business

    After the holiday rush, it's still important for businesses to continue innovating. To maintain longevity and keep an edge over their competitors, managers need to constantly think of ways to future-proof their companies. Although it can be difficult to know what exactly is coming next, a brand can take a few steps to ensure that a company's]… […]

  • Gain Social Media Followers

    7 Ways To Attract More Social Media Followers For Small Businesses

    Social media platforms like Twitter, Facebook, YouTube, and LinkedIn are wonderful ways to connect with your customers, answer their questions and alert them when you have a new product or a sale. However, the benefits of social media can only truly be realized if you have a following. Creating a social media account is only the… […]

  • Entrepreneurial books to own

    7 Books All Entrepreneurs Should Have On Their Bookshelves

    Becoming an entrepreneur can be a fun, exhilarating adventure. But sometimes, the enormity of the challenge of starting and leading a successful business can be overwhelming. In those moments, it's important to have inspiration to propel you forward, or advice to give you clarity to your situation. Luckily, some of the best business advice and… […]

  • Business feel stagnant?

    Does your small business feel stagnant? Advice for jump-starting success in 2018

    Once you've successfully established your small business, you've reached a major milestone in your professional life. You've successfully met a variety of crucial needs, like creating cost-effective workflows, building relationships with clients, managing workloads and many others. However, you may also feel like your company isn't growing as quickly or as strongly as you'd like… […]