9 Ideas To Protect Your Company Finances
Running a company takes a whole lot of dedication and time, when you’ve built a company from scratch you’ll want to take great care of your assets and finances. Luckily you don’t need to be a financial whizz kid to protect your business. With a few simple steps, you’ll be well on the right track.
Research from CSO online revealed that ‘the average cost of a data breach in 2020 was $3.86 million.’ Businesses must take steps to protect their finances, along with their reputation and their data. To keep your business safe online you can implement the following strategies:
- Antivirus & Malware Software: Companies need to invest in malware and antivirus software, to keep their data and devices safe. If you operate in the cloud you’ll also need cloud-based security software.
- Authentication Systems: With the help of Multi-Factor Authentication Systems businesses can ensure that only authorized users are logging onto the network.
Grow Your Cash
Protecting your finances isn’t just about taking care of your money, it’s about making plans for the future. To achieve financial freedom and grow your money consider pursuing investment opportunities. You might choose to invest in stocks and shares, commodities like gold, or assets such as real estate. Business owners can also make money through P2P lending schemes, or by investing in other companies. Before you can grow your money you’ll need a solid plan to reduce your debts.
Keep Your Company & Personal Finances Separate
If you want to protect your business finances you should keep your personal accounts separate from your business ones. Unless you do so it will be complex when you come to complete your tax returns. What’s more, it can be a challenge to clearly visualize your expenses and profits.
When you’re choosing your bank accounts it’s a good idea to shop around. Choose a high-interest account to earn money on your income over time. There are plenty of high-yield accounts out there, or you might consider a Certificate Of Deposit. With a CD you pay in a set lump and leave the sum in the account. Over years the interest will grow and earn you a nice reward.
4 . Get The Right Insurance
Every kind of company needs some type of business insurance, the right insurance will protect you from any potential liabilities. General liability insurance is the basic type of cover that all types of businesses need. GL insurance will cover you if a member of the public is injured, and claims that you are at fault. This type of insurance will also cover you if an individual’s property is damaged, (and they try to sue you). Most businesses will also need worker’s compensation insurance and product liability insurance. It’s important to have the correct insurance coverage to protect your finances and keep you out of legal trouble.
Utilize Accounting Tools
Entrepreneurs need efficient accounting tools to organize their accounts and taxes. Here are a few of the leading options for SMBs:
This application can support businesses to organize their finances and boost productivity levels. Using ZipBooks you can benefit from features budgeting, time tracking, and income projection.
QB is one of the most popular accounting tools for startups and small businesses. Using QuickBooks you can manage your invoices, sales, expenses, and more. You can benefit from data visualizations and financial reports.
An IRA Account
Entrepreneurs can protect their future finances by investing in an IRA account. These accounts are a great option for self-employed people and small business owners. Using an IRA you can invest in stocks, bonds, or mutual funds. If you go for a self-directed IRA you can also invest in real estate. When using these accounts for business or real estate you’ll need to learn about ‘Unrelated Business Income Tax’ and ‘Unrelated Debt Financing Tax’. To Learn more, access the Accuplan website.
Work With A Financial Mentor
If you’re looking to protect your company finances, it’s advisable to work with a financial mentor. A financial mentor can help business owners to assess their financial status, develop financial goals, and make plans for the future. Many entrepreneurs are incredibly creative but don’t necessarily have the know-how to oversee their finances. For this reason, it’s advisable to work with professionals. From accountants to financial coaches there are plenty of ways to get financial support.
Choose The Correct Business Structure
To protect your company it’s important to choose the correct business structure. There are several different types of business structures, each with different legalities and tax responsibilities. The main business structures to choose from are limited liability corporations, partnerships, or sole proprietorships.
A sole proprietor business is simple to set up, however, company owners have little protection. Under this structure, entrepreneurs will be held responsible for the financial obligations and debt of the company. LLCs can offer owners more protection, and so these are a favorable option for many small business owners.
Create An Emergency Fund
Things don’t always run according to plan, there might be times when your business is struggling financially. You might find yourself having to pay a large amount of money for an unexpected expense. To prepare for times like these it’s a good idea to have an emergency fund to fall back on. Start by reviewing your business budget, take a good look at your expenses and figure out where you can save, (and how much). Decide on a set amount to pay into your emergency fund, every month. An emergency fund will add an extra layer of security to your business.
Protecting your company finances is incredibly important. Without the right insurance and accounting support, you could land yourself in expensive legal trouble. To ensure that you protect your interests you’ll want to think about which business structure suits you best. For a great level of protection, an LLC is a good choice. There are plenty more tips for entrepreneurs that can help you to grow and thrive.