Spring cleaning for business finances

Owners of Illinois small businesses may be dusting behind their desks and clearing unneeded items from their drawers in honor of 'spring cleaning." While clearing away physical clutter is important, the time can also be used to reorganize business finances. Evaluating cash flow, business expenses and the business plan are a few of the ways a small business owner can give the company a financial spring cleaning.

Cash flow is one of the most important aspects of a successful business. If a business has a financial emergency but has no cash on hand to pay for it, finances can quickly go in the red. A business owner may want to take the time to evaluate cash flow and determine if there are any gaps between income and expenses that may be bridged with a line of credit.

Budgeting for upcoming expenses can help a small business to achieve better cash flow. During financial spring cleaning, a small business owner may want to create a separate bank account that is dedicated to saving money for tax season. It is also important for a small business owner to use separate checking and credit accounts for the company so that personal expenses do not get commingled with business expenses.

Many new ventures are initially formed as a limited liability company. However, as they grow and look to attract outside equity financing, an attorney who has experience with these matters may suggest that the company become a corporation, as many investors are far more comfortable with that structure. The attorney will point out the steps that will need to be taken in order to accomplish this.

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