How to Manage Your Small Business Finances

For small business owners, properly managing your finances is critical but can also be challenging, especially if you’re just getting started. Whether you’re a freelancer, or have a business with a number of employees, learning financial planning basics like tracking revenue, accounting, and expenses and budgeting for taxes is invaluable.

Read on for top tips to managing small business finances, from setting up proper accounting systems to avoiding cash flow issues. By implementing best practices across your financial processes, you can confidently manage your business successfully and set goals for the future. With some careful planning, you can ensure you’re able to build a thriving small business.

Note: This Making It article was created in collaboration with Amaka. It is not meant to be construed as professional financial or legal advice. Refer to local regulations and a financial professional to understand your obligations.

How to track your finances 

One essential financial task for small business owners is establishing a system to track revenue and expenses. As a business owner, having a foundational grasp of accounting and bookkeeping basics, like properly categorizing income and expenses, is a necessity. 

At a minimum, it’s important to regularly track:

• Revenue: Your total earnings 

• Expenses: Your total cost of doing business

• Cost of goods (COGs): Total costs for creating a product

• Gross profit: Revenue minus the cost of goods

• Net profit: Revenue minus cost of goods and expenses

• Taxes: Taxes you collect on products sold and taxes you owe as a business owner

This is where accounting software can help you. A good accounting tool will help you track these categories and understand what endeavors are most profitable.

Squarespace users with a Business or Commerce plan will get sales and payment tracking details in their sales analytics. To stay on top of every detail, there are Squarespace Extensions that can support your needs.

A cloud-based accounting software, which runs and tracks your finances online instead of on your desktop, can give you access to key financial data and easy-to-read reports that assist in getting an overview of your businesses’ performance. 

With the right accounting tools and discipline around recording financial transactions, you can gain visibility into the financial performance of your business. Tracking finances may require some adaptation, but is crucial for making smart decisions and keeping a business financially organized.

Automate your financial tracking

You’ll save time and get some peace of mind if you find ways to automate your accounting and bookkeeping workflows. A tool that automates your tracking saves you time on logging every transaction manually and ensures you have accurate financial data.

Those selling on Squarespace can use an accounting integration with Amaka that automatically syncs transactions from Squarespace to its accounting software. Having all your data in one place and skipping manual data entry is a game changer for simplifying your data management and processes.

Amaka’s integrations will also spare you from human error, helping you maintain accuracy in your numbers and reports. You can find the Squarespace + Xero integration and Squarespace + MYOB integration on the Squarespace Extensions marketplace.  

Take the time to figure out what information you need to track and what fits best with your business. With some research into available integrations, you can choose the right automation tools for your business needs and create an efficient financial management workflow.

Understanding your financial reports  

Regularly reviewing your financial statements is key to managing your finances well. This includes income statements, balance sheets, and cash flow reports, which are typically made available on your accounting software as separate reports. 

• Income statement: Shows a company’s revenue, expenses, and total profit and loss over a specified period of time.

• Balance sheet: Provides a snapshot of a company's assets, liabilities, and equity at a single point in time.

• Cash flow report: Records the cash income and cash paid out of a business over a set period to analyze where cash is being generated and spent.

These documents provide valuable insights into the performance and health of your business. Learning to read financial statements allows you to calculate important ratios that track profitability, debt levels, and other metrics over time. This way, you can spot problems, find opportunities, and make informed decisions going forward. 

For example, monitoring your income and expenses each month can alert you to potential cash flow problems before they become urgent issues. Analyzing the trends in your sales and revenue can reveal whether you need to adjust pricing or adjust current stock levels. 

Read our guide to accounting basics

Best practices for small business finances

Organizing your finances well from the start is the most important step to keeping things on track. This means your data is categorized appropriately, accurately, and in a timely manner.

When your finances are organized, you’re able to have insight into your current cash flow and interpret different statistics into actionable strategies that drive growth. As your business continues to grow, the need for tools that can simplify or eliminate the need for manual work becomes more necessary.

Cloud-based accounting software can ensure you have an accurate view of your finances and gain financial insights. Ongoing habits like maintaining a budget, watching for errors, and forecasting to guide spending are essential. For example, you may find you earn more during some months than others, which can help you anticipate busy seasons and prepare inventory or marketing plans in the future.

It’s also important to regularly reconcile your accounts to identify discrepancies and meet any local compliance requirements. This involves comparing two sets of records, such as the data in your accounting software with the data in your bank account, to ensure they match up.The effort to follow and maintain financial best practices pays off in stability and savings.

Learn how to track your cash flow

What resources and support are available?

If you’re just starting out and looking for tools to assist you in managing your finances the best place to start is by browsing the Squarespace Extensions available to you. You’ll be able to find a wide range of apps that can assist you according to your needs. For example, Amaka is available on a free plan with unlimited, ongoing support. If you need help setting up your integration, you can schedule a guided session where an Amaka Integration Specialist will meet with you over video to set up the integration according to your needs. 

For financial or tax advice, make sure you’re working with a licensed professional who’s well-versed in regulations and compliance laws where you do business.