How to Keep on Top of your Finances as a Business Online?

Posted on December 28, 2018 by Nikhil P Naik

Online businesses might be profitable but they require a lot of work to maintain and grow. If as an entrepreneur, you do not deal with each and every aspect of your online business, soon enough things will start to get out of hand. One of the most crucial aspects of any business is its finance. Only when you are able to be on top of the finances of any business, you can monitor the business and control its destiny.

With so many different overheads, it can be a difficult task to manage finances for an online business. If you have run an online business before or do so currently, you might often face the question How to keep on top of your finances as a business online? We will today help you find the answer to this question by sharing with you a few simple steps which you can follow to manage your business finances.

Separate your business and personal finances:

While this might seem like common sense but many business owners and entrepreneurs procrastinate in this regard. The problem is that as your online business grows, your personal and business finances will become more intertwined if you have not separated them at the initial stages. That is why it is important to separate your business and personal finances right at the start.

Some of the steps which you should take in this regard include:

  • Separating your business and personal bank accounts
  • Separating your business and personal credit cards
  • Filing dedicated business tax returns every year

Once you are able to follow these 3 simple steps, it will be very easy for you to eliminate any confusion. This will allow you to manage your business finances in a much better way.

Choose the right accounting software for your business:

The best thing about running an online business is that you can directly integrate it with numerous accounting software. This will allow you to automate various processes which are normally done manually for off-line businesses. There are many accounting software which allows you to integrate your e-commerce, online, website sales. You can choose among software options like:

  • Xero
  • QuickBooks
  • Freshbooks

Moreover, you have to ensure that you always store your online business data on the cloud. This will ensure that you do not lose that data ever. You will be able to monitor it in real time as well. Many e-commerce backends are directly integrated with a variety of different cloud services. This allows you to monitor your business finances in real time.

Thus, you need to not only choose the right accounting software but ensure that you have a backup of your online business data on the cloud.

Keep track of the refunds/returns:

The refunds/returns are negligible when you run an offline business like a restaurant. However, for online businesses, these can be around 5%. Moreover, they are spaced apart in time. The returns/refund requests can come even 2 to 3 weeks after the sale. That is why; you have to always keep track of the refunds/returns.

When you deduct this amount from your gross sales, the tax which you pay on your net profit will go down significantly. That is why, instead of ignoring the refunds/returns thinking that they are just 5% of the gross revenue, it is a good idea to keep a watch on them. This will also help you reduce your tax outgo. As a result, you will be able to boost the bottom line of your online business.

Corporate Finance

Use a business analysis tool:

Online businesses are required to be nimble. This means that you might have to change your strategy within a few weeks. It is important to always monitor the key performance indicators to find out whether your latest strategy is working or not. In order to do so, it is important to always use a proper business analysis tool. There are a couple of options like:

  • Datapine
  • Xero

These tools allow you to monitor the key performance indicators through graphical representations. This ensures that in a single glance, you can monitor the progress of your business. This will allow you to easily judge whether the business is growing or stagnating or decreasing. Thus, you can take the right steps to improve your business within a proper time frame.

Use dedicated E-commerce Solutions:

In order to stay on top of your business finances, it is important to use dedicated e-commerce solutions. When you use the solutions to make sales online you can track each and every sale and the amount which it brings in. You can use payment processors which are integrated with various accounting software like:

  • Apple pay
  • Square
  • Paypal

This will ensure that you are able to automatically synchronize the data with the accounting software which you choose. As a result, you will be able to keep track of your business finances with the help of a single click.

When you use dedicated e-commerce solutions, it will be easy for you to get proper stats from your e-commerce sales. You will be able to monitor the stats automatically in your accounting software which will allow you to always keep track of your business finances.

So, if you want to take proper control of your business and grow it, it is important to stay on top of the finances of your business. With the help of the 5 simple steps, you will be able to take complete control of your business finances. This will allow you to monitor and grow your business consistently.

About Nikhil P Naik

Nikhil Naik has a Master's Degree in Information Systems, and is currently working as a Software Engineer at Nielsen. He also loves playing cricket, listening to music and travelling. Twitter Handle - @buzz_nikhil.

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