This month, Sierra Thomas of Touché Financial Solutions shared her expertise on setting up a financial system for your business. All Haven members can watch the replay of the event any time they need to inside the Member Resource Library, but here are a few of the highlights.
What is a financial system and why do I need one?
Think of your financial system as a centralized ecosystem that tracks your revenue, expenses, liabilities– everything associated with your business, no matter how you are paying it (cash, debt, etc.). In this digital age, there are several types of accounting software that you can use to integrate the different components of your financial system. A well structured financial system can help you in making decisions, determining the success of your business, and allow you to plan for tax season throughout the year.
What makes up a financial system?
With your accounting software, you will want to link any bank accounts, liability accounts, and any other business expense accounts you have. It’s good to have 3-4 separate bank accounts linked:
- Operations – a general business checking account
- Savings – a general savings account, which can help cover expenses during slow periods
- Tax Savings – a savings account that you contribute to monthly/quarterly to put toward your expected/projected taxes
- Payroll – if you are paying employees, it would be helpful to have a separate account dedicated to payroll
You could also link any liability accounts you have (business loans, credit cards, etc.). This will help make sure you know what’s outstanding, even if you don’t have to pay it immediately. By linking any other external accounts (think Paypal, Stripe, etc.), you’re able to see the actual sale amounts before any merchant fees are deducted, which can help you to accurately reflect these numbers in your financial statements.
I have my financial system set up – now what?
You can use your accounting software to generate many different reports, but the most helpful will likely be Profit and Loss, the balance sheet, and the statement of cash flow. You can use these reports and others to evaluate how well your business is (or isn’t) performing. By setting benchmark key performance indicators (KPIs), you’ll be able to easily review your business’s financial performance over a set period of time.
Business finances have you feeling stressed? Or maybe you need a little guidance on how to get the most out of your current financial system? Check out Touché Financial Solutions’s website to learn how to connect with Sierra, and give them a follow on Instagram.
Haven Collective members have the added perk of a 30-minute personal session with Sierra, who is a member of our coaching team. To learn more about Haven Collective’s in-person and virtual memberships, reach out to us.