Just like your personal, family budget and expenses, your home business requires you to make choices and decisions about how to manage cash flow. You will need to decide if you are going to have a separate business bank account and whether you will pay for expenses using checks, purchase orders, or a corporate credit card account (or a line of credit with your financial institution.) While some of these choices might not be available to you, you’ll still need to decide how you’re going to manage your cash flow and it will likely be one of the first decisions you make about your home business.
Traditional business checking accounts are a common way most businesses process financial debits and credits. However, a credit card can make purchasing supplies, ordering advertising and paying for transportation much more convenient. Remember to factor in any interest rates and fees when deciding if this is a useful way for you to conduct business. Credit cards and lines of credit can also help in managing cash flow—which can be very important in a start-up business. Regardless of what you choose, pay attention to the cost of all of your financial business accounts so you can find the best services at the best rate.
You may consider using purchase orders to keep track of your expenses but these can be time consuming and are not always welcome with vendors. It will depend on the type of business you are in as to whether these will be standard and accepted or not.
Keep in mind that you will still need to keep accurate records and budgets, regardless of the way you choose to manage your business finances. Also, make sure that you keep your home business finances separate from your family coffers—at least as far as managing expenses and tracking income are concerned.
See Also: What You Should Know About Receipts
The First Rule of Home Business–Keep a Record of Everything