Kody Wirth is a content writer and SEO specialist for Palo Alto Software—the creator's of Bplans and LivePlan. He has 3+ years experience covering small business topics and runs a part-time content writing service in his spare time.
3 min. read
Updated January 5, 2024
Getting your business finances right is crucial for starting a business. Even more so if you want to see your business grow.
Don’t let that scare you. Even if this is your first time dabbling in financial planning, you can break the work into seven manageable steps.
By working through this guide, you can outline startup costs, understand the basics of financial planning, and prepare for accurate and efficient financial management.
Financial management is an ongoing process for business owners. These are the steps you should take to get started.
What will it cost to start your business? Check out common examples and resources to help you calculate, manage, and minimize your starting expenses.
Dig Deeper: Small business startup costs explained
Sales, expenses, personnel, and cash flow—learn how to track these critical financial components and make forecasting a regular part of business operations.
Dig Deeper: How to write a financial plan with forecasts
A business bank account is more than the place where you store cash. The bank is your partner regarding funding, and you want to be sure you choose the right one.
*Tip: Before you can open a business bank account and set up payroll—you need to apply for an Employer Identification Number (EIN). Check out our guide to learn how to apply.
Dig Deeper: How to open a business bank account
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Make your business finances clean and straightforward by separating them from your personal funds early on.
Start tracking your expenses, prepare to take on employees, and stay on top of your tax obligations by understanding the basics of accounting and payroll processes.
Dig Deeper: Accounting and payroll basics
Prepare to attract and get outside funding—even if you don’t need it immediately.
Dig Deeper: 5 steps to get funding for your business
Paying yourself may be the last thing on your mind, but don’t leave yourself out of the equation. Follow these seven steps to determine when to give yourself a salary.
Dig Deeper: When is the right time to pay yourself a salary?
Setting up your business finances is more than a startup step. It leads to several long-term benefits:
A clear understanding of financial health allows you to make decisions based on concrete data. Whether investing in new equipment or launching a marketing campaign—having a clear financial picture reduces risks associated with decisions.
Regular financial oversight helps you identify areas of growth and waste. You can maximize returns by focusing on profitable activities and reducing unnecessary expenses.
Proper financial management ensures that all obligations, especially tax-related ones, are met on time. This helps you avoid penalties while remaining compliant with local, state, and federal regulations.
Transparent and effective financial management fosters trust among investors, employees, and customers. When stakeholders are confident in a business’s financial stability, it can lead to increased investments, employee loyalty, and customer retention.
A solid financial foundation allows you to invest in business growth regularly. Growth could include expanding product lines, entering new markets, or hiring additional staff.
Getting your finances in order is the last planning step you need to take.
You now understand your costs. You have expectations for the future, a relationship with a bank, and have started setting up accounting processes. And whether you need it now or later, you are better prepared to seek additional funding.