Small Business and Finances

Sukanya Banerjee
August 29, 2022

Every business, be it small or big, should have a distinct pathway to manage their finances. Usually, the big business houses have their own finance departments who look after the financial needs of the company, their projections, profit and loss and so on. But those businesses which work on a very small scale, like a corner shop, or a personal hair groomer, often mix up their business incomes and expenses with their personal ones. This can lead to losses for the individuals and higher taxes. It is very important to manage your finances and keep them separate from your personal income and expenses.

Funding the small business

Most of the time, the funds for the small business come from the owner’s personal savings or loans from family members. There are various other ways to get your business funded. You can choose from the following:

1.      Loans: A small business can get loans from the market in various ways such as from the banks as a traditional bank loan, business line of credit or a business credit card.  They usually have competitive rates but needs good personal credit to qualify. SBA Loans are good for those who do not meet the stringent policies of bank loans. And the processing method is quite easy. Online loans can also be obtained for those business owners with low credit. But, these usually have high interest rates.

2.      Small business grants:  These are good for startup businesses and for those who have a hard time qualifying for a traditional loan. Often offered by state and federal agencies as well as some private organizations.

3.      Crowd funding: This is another method which can be used to raise some funds for starting a business. But these are not very resourceful most of the times.

Importance of finance management for small business

It is extremely important to manage your funds and have knowledge about the budget and cash reserves of your business. It is definitely important for the owner to have some basic knowledge of accounting including cash flow, net profit, expenses and tax implications. It can be taken care by an experienced accountant while the employer can manage it by staying on top of a few things like:

·      Paying bills on time

·      Having an extensive knowledge of the debts and loans

·      Increasing revenue thus securing good credit

·      Planning a budget

·      Understanding the cash flow projections

·      Procuring a financial management software

·      Consequences of poor finance management

One of the various reasons why a business fails is poor finance management. This can lead to several consequences including:

·      Persistent losses

·      High debts

·      Inadequate cash flow

·      Pending litigation

·      This can be due to improper planning or budgeting along with lack of resources and experience.

·      Marketing the business

Another very important factor for the growth of a small business and to improve its financial status is to market its products and services. You can advertise in social media or take professional help to spread the name. Always reach out to friends and family and your acquaintances as they are your biggest market.

Support your friend’s business and progression like you support the celebrities that you actually don’t know. – Anonymous

So, we conclude that having a clear idea about the financial management is extremely important for the growth of a business and its smooth functioning. It is always good to get some help if the owner is incapable of doing it on his own. This will benefit the business.


HTH & Accounting Associates help organizations and business owners with accounting and/or financial consulting services.  

For Help with accounting cycle or Bookkeeping contact us at or call usat 909-599-2111  



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Thanks for reading. Till next time.

The author of this blog is Sukanya Banerjee. I work as an accounting Intern at Thaddeus. I chose Thaddeus because of its outstanding mission of empowering women in the society. I hope to make accounting a part of my career.