You started as a one person operation. Now your business is growing. You’re hiring employees, managing larger invoices, paying vendors, and planning for more growth. But the financial systems that worked when you launched may not be enough for the next stage.
As your revenue grows, your financial systems need to keep pace. Here’s how to scale your finances so your business can thrive.
Signs your financial systems may need an upgrade
Running a small business in Maryland means balancing many priorities. Taking a step back from the day to day can help you identify opportunities to improve your financial foundation.
Here’s a checklist to see if you’re ready for an upgrade.
- You’re managing business finances via your personal accounts.
- You spend hours on bookkeeping every month.
- Your cash flow is getting more unpredictable.
- Payroll is becoming increasingly complex.
- Tax season is stressful and time-consuming.
- You don’t have any cash reserves for the business.
If any of these sound familiar, the five tips below can help you build financial systems that support growth.
1. Separate business and personal finances
One of the most important steps for a growing business is creating clear boundaries between business and personal finances. Opening a business savings account alongside a business checking account can help you stay organized and prepare for future expenses.
A simple setup may include:
- At least one business checking account for operational costs.
- At least two savings accounts: one for tax savings and one for building cash reserves.
- If you use credit cards, get a business credit card rather than using a personal one.
- Open business accounts for any digital banking like PayPal, Venmo, etc.
2. Upgrade up your bookkeeping systems
As your business grows, manual processes can take valuable time away from serving customers and planning for the future.
Consider these ways to simplify your bookkeeping.
- If you’re relying on spreadsheets, try moving to accounting software.
- If you’re juggling invoices and expenses, try automating billing and expense tracking.
- If you don’t have visibility on your finances, try creating a financial reporting process.
- If accounting work is taking too much time, try working with a CPA or accounting professional who can streamline your bookkeeping (or even take it off your plate).
3. Revisit your tax strategy
A growing business often faces new tax considerations. Taking time to review your approach can help you avoid surprises and identify potential savings opportunities.
- Avoid surprise tax bills by paying estimated taxes on time and calculating them correctly.
- Explore tax-savings options, like electing S-corporation taxation for LLCs/LLPs or forming a corporation.
- With more money at stake, now may be the time to add tax preparation resources.
- Stay informed about Maryland and federal tax requirements.
4. Prepare for employees and payroll
Scaling your business means shifting how you work: finding employees you can trust, setting them up for success, and complying with employment laws. Here’s how to get prepared.
Payroll and payroll taxes
Most businesses hire a payroll service to handle paychecks, withholding, and taxes. If you’re hiring your first employees, make sure to budget for payroll taxes. Here’s how it works.
Withholding type | Employee pays | Employer pay |
Federal, state, and local tax | Yes | No |
Social Security and Medicare | Half | Half |
Federal unemployment tax | No | Yes |
Maryland unemployment tax | No | Yes |
Benefits like health insurance | Varies | Varies |
Onboarding and support costs
When your business is just you, you keep everything in your head. As you scale, thoughtful employee onboarding and support can help you maintain quality. Here are some options.
- Invest in an onboarding packet of required forms, like tax forms, employee handbooks, payroll forms, and other materials.
- Budget for training on work and compliance issues, like preventing sexual harassment.
- Pay for professional development to build employee loyalty and increase skills.
5. Build strong cash reserves
Growth often requires more working capital. A healthy reserve fund can help your business stay flexible and resilient by:
- Managing seasonal fluctuations.
- Covering unexpected expenses.
- Navigating temporary cash flow gaps
- Investing in growth opportunities.
Scale your business with confidence
Growth creates new opportunities, but it also brings new financial responsibilities. From managing payroll to building cash reserves, having the right financial foundation can help your business stay on track.
Our business banking team can help you explore accounts, lending solutions, and financial services designed to support growing businesses. Whether you’re hiring your first employee or learning about how to scale your business, we’re here to help.
Connect with our business banking team today.
