The way you handle your business finances can make or break your company. So when you're juggling expenses, payroll, taxes, profits and other financial components, establishing a clean and compartmentalized system can help you avoid hangups and keep your money in order.

Instead of diving in and trying to keep track of everything in one large record-keeping book, divide your finances into categories. These categories should include:

1. Significant expenses

This could include inventory purchases, emergency cash for seasonal lulls or issues, major investments and other costs that are likely to take a big chunk out of your capital. Further, you can divide these into sub-categories to make them easier to identify, track and manage.

2. Taxes

The last thing you want is to try to track down all your necessary tax paperwork and supporting documents for Uncle Sam at the last minute, which can lead to costly errors and missed opportunities. So keep track of your tax information, deadlines and necessary forms in one location, and store it in a separate folder or file that you can add to as the year progresses. It's also important to have an idea in your head of which types of business credits and deductions you may qualify for, so include the back-up documents you need to support these write-offs. For example, if you travel frequently and entertain clients for your business, make sure to keep all receipts, invoices and a description of the charge in question.  As always, contact your tax advisor for deductibility of items.

3. Invoices

The way you manage your billing will impact your customer and client relationships, your business credit and your reputation. Therefore, it’s imperative to make sure your invoices are complete with all the information your vendors and clients need to make the payment. For example, a thorough invoice might include the following:

1. Tax ID number to help you prepare your paperwork during tax season
2. Clearly identified "to" and "from" section as well your address and the address of the client or vendor
3. Date the invoice was sent out, as well as due dates and penalty dates
4. Description of services rendered and the date the service was performed
5. The total amount owed. Some business owners may consider bolding this portion to make sure it stands out among your breakdown of services rendered.

Small business owners may do more invoicing than they think, making it important to keep track of all the paperwork and payments. Investing in billing software is one cost-effective way for business owners to manage their invoices, thereby reducing the risk of errors and maximizing efficiency.

The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of ZB, N.A.