7 Business Finance Areas You Can't Ignore

If you’re in business, you can’t ignore finance. Unfortunately, it’s also one of the most intimidating subjects out there. Thankfully, you don’t have to be an expert to know how to handle your finances. While there are lots of different areas of business finance, some are more important than others and will help you do what’s most important: run your business effectively! Here are seven different areas of business finance you can’t ignore, including examples from companies both small and large.

Improving your cash flow

Improve your cash flow by creating a budget and sticking to it. How much you have in your bank account at any time should be the last thing on your mind, not the first. Instead of looking for ways to spend money, try to find ways to save money.

Understanding Depreciation

Depreciation is an accounting method used to allocate the cost of a tangible asset over its useful life. This allows for the deduction of the cost from your gross income. Depreciation is not a tax deduction, but it does reduce your taxable income and can result in a lower tax bill.

Depreciation is calculated by dividing the cost or value of an asset by its useful life, usually expressed as years.

Reducing debt

If you're under a lot of debt, then you need to get it taken care of as soon as possible. High-interest debt can be crippling and take away from your ability to grow your business. There are many ways that you can go about doing this, but the most important thing is to find a way to pay off what you owe quickly.

Tax advantages of owning a home

Owning a home has many tax advantages. For example, you may deduct mortgage interest and property taxes on your federal income tax return. If you itemize deductions on your federal return, you can deduct the interest on your home equity loan or line of credit used to pay off the mortgage. This deduction is available even if you do not itemize deductions.

Are you getting all your 401k employer matches?

If you're not getting your full 401k match, you're missing out on free money. The average employer match is 3% of the salary. If your employer matches $3 for every $1 that you contribute to your 401k, it's like getting a 100% return on investment!

Avoiding costly tax mistakes

Income taxes are one of the most costly mistakes a business can make. There are many ways to avoid these tax mistakes.

Education tax credits can be huge savers

Education tax credits are one of the best ways to save for education. It's a federal tax credit that reduces your federal income taxes by up to $2,500 per year. The money saved on taxes can go straight into your child's college fund!