Finances can be complicated, but it’s an essential part of running any business. Towing is a fast-paced world, and you and your drivers are probably always on the go, juggling calls from clients and taking care of the tow trucks. It’s completely understandable that finances might have ended up farther down on the to-do list than you intended. But it’s important to be organized and detailed when it comes to your business finances. We’ve got a few tips to help.
How to manage your tow business finances
1. Organize the money.
First things first – keep your money organized. By this we mean that you ought to have a separate checking account for your business than for your personal money. That way you can keep your funds where they need to be so they don’t get all mixed up. Your personal account is for, well, you as you live your life and you can keep the business money in its own account. This will make everything easier and allow you to keep your money separate.
Pro tip: To pay yourself, write yourself a paycheck and put it in your personal account.
2. Research accounting software.
If you want to keep your financial situation organized, you could do some research on different accounting softwares to find out if this could be a good option for you. For example, Quickbooks could be an option. What do you want the software to be able to do? Think about some criteria you need the software to meet and find a reputable software that will help you keep track of all the expenses and income. (And of course, you have to think about your budget – how much are you willing to spend on the software?)
3. Get an accountant.
Another thing that can really help with your tow business finances is to get an accountant who’s familiar with the towing world. Towing is a very niche industry, so it’s important to work with someone who truly gets what you do and how it works. A reputable, licensed professional can also help you out with the taxes and all that good stuff – it’ll take a load off your mind and you won’t have to fear making any IRS mistakes!
4. Keep your invoices organized.
When it comes to your invoices, you need to have a method that will allow you to keep everything detailed, organized, and consistent. Maybe you want to get some 3-copy invoice books that have your company logo and name on them – wouldn’t that be neat? (Just remember that you need to be careful when you order new books so that you pick up where the last book left off – that would be confusing if you started all over again at 1 when you just finished Invoice 200.) Yes, writing out invoices and all that might seem tedious, but have a consistent method and take the time to do it right. This will help you when you’re trying to make sense of things later on.
5. Look at the big picture of your finances.
Sometimes when you look at your account balance and find that it’s dipped, you might want to panic. But remember that your account balance doesn’t necessary reflect what’s happening with your business’s finances. To really see how the business is doing money-wise, you’ve got to look at the big picture – your expenses, your income, etc.
6. Don’t be lazy with invoices and records.
Yes, you’ve got a lot to do. And yes, being organized might feel like it takes a lot of time. But it’s really important that you have an organized way of writing out your invoices and records. Everything should be consistent. If you have labels for things like your income sources (for example “cash call”) and expenses (tires, insurance, fuel, office, etc.) don’t give up on them. Stay consistent with your labels. You will be so pleased with yourself when you go to look over all your invoices and you realize that you’re not scratching your head trying to remember things. Find an organizational method that works and do your best to keep it up.
7. Keep up with your finances and see how your business can grow.
Having a real understanding and picture of your business’s finances can help you as you strive to grow your business. You need money to grow, right? And you also need to know where that money is coming from, where it’s going, and so on. This can help you prepare for the future of your business.
Another thing about your business…you need to protect it with tow truck insurance. We can help with your towing insurance so you don’t have to stress about it. Get started with quotes by filling out our online form, giving us a call, or messaging us on LiveChat.