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Small Business Financial Checklist: 7 Essentials for Managing Your Finances

As a small business owner, you have a lot on your plate. Between managing operations, employees, and growth, it can be easy to let your finances slide. However, getting a handle on your financial management is critical for the health and sustainability of your business.


Follow this financial checklist to ensure you have all the financial bases covered so you can confidently move your business forward.


Analyze Your Cash Flow Regularly


Cash flow analysis should be a regular task, not just something you do at year-end. By analyzing cash flow monthly or quarterly, you’ll spot trends, issues, and opportunities early when you still have time to course-correct.


Start by looking at monthly income and expenses to understand your available cash balance. If more is going out than coming in, you need to trim expenses or boost revenue. Also, compare cash flow year-over-year to identify seasonal patterns.


Tools like online accounting software QuickBooks can automate cash flow analysis so you have an ongoing pulse on your financial health.


Stay on Top of Accounts Receivable


Don’t let unpaid customer invoices pile up. Consistently staying on top of accounts receivable ensures customers pay on time, preventing cash flow gaps.


Aim to calculate “days sales outstanding” regularly. This metric shows the average number of days it takes customers to pay invoices. Aim for under 30 days for healthy cash turnover. If it starts creeping up, take action by following up with late payers.


Automated payment reminders and online invoicing through PayPal, Square, or others can simplify accounts receivable management.


Know Your Tax Obligations and Strategies


Come tax time, understanding your obligations, deductions, and savings opportunities is essential. Work with a small business tax specialist to ensure you complete all required filings and tax forms correctly based on your business structure.


An accountant can also help you identify tax reduction strategies like the Qualified Business Income deduction, vehicle and equipment expensing, and employment credits.


Outsource Non-Core Functions


Consider outsourcing non-essential business functions like HR, accounting, and technology. This allows you to save money and focus your efforts on the core activities that drive growth.


For example, outsourced payroll services like Gusto can handle paycheck calculations, filings, and compliance obligations for under $40 per month. Online bookkeeping services like Bench take care of tasks like accounts payable and reconciliations for about $350 per month.


Update Your Business Plan Regularly


Your business plan guides critical decisions and strategies. But too often, owners fail to revisit this document after the initial startup stage.


Make business plan updates an annual ritual, if not more frequently. Analyze how projections match reality in areas like revenue, customer acquisition costs, churn rates, and staffing needs.


Updating keeps your plan aligned with financial outcomes and market forces so you can adjust strategies accordingly. It also ensures you have an accurate blueprint to convey to potential investors or lenders.


Get a Grip on Inventory Management


Sloppy inventory management causes unnecessary costs that hurt profit margins. Make sure to count and reconcile inventory at least annually. Catalog excess stock or write-offs for disposal.


Investing in barcode scanners and inventory management software can simplify tracking and reduce waste. It also ensures you have enough stock to meet demand without tying up too much-working capital.


Review Partnership Agreements Annually


If you have business partners, revisiting your partnership agreements should be an annual ritual. Make sure ownership splits, distributions, buy-sell terms, and decision rights reflect any changes at your company.


Also, account for updates to state and federal business laws that may impact agreements. An attorney can help amend terms to keep everything clear and current.


Stay Proactive With Financials


Managing finances might not seem exciting, but it’s the foundation for small business success. Following this checklist will help you spot issues early, seize opportunities to strengthen financial fitness, and safeguard your company’s future. Be proactive about regularly reviewing each area.