1. Keep the money separate.
It’s important to have separate checking accounts for your towing business’s money and your own personal money. Otherwise, it’ll be a nightmare trying to keep things organized. Basically all of your business expenses and such are for the business account, and all your personal expenses from, you know, living, are for the other account. (As far as paying yourself goes, pay yourself and put the check into your personal account.)
2. Think about your software.
Accounting software can be a big help when it comes to keeping everything organized and keeping track of all the money. It’s intended to make life easier, so do some research to see if there’s accounting software that’ll suit your business. There are a lot of options out there. Think about what you need the software to do – for example, will you need it to take credit cards? Also – how expensive will it be? Is it user-friendly? Your tow business finances can stay all in line if you have account software.
There’s tons of cloud-based options available for small businesses, such as Xero, Wave, Quickbooks, ZipBooks, etc. and many are free, or have low monthly options. For towing-specific businesses like yourself, there are also some industry options available. In fact, Capterra has a 2019 list of the best towing software available and at the top of that list is Towbook, Omadi, and others.
ONE STEP FURTHER: While we’re discussing software, check out this great list comparing all the top dispatch applications available.
3. Have an accountant.
Having an accountant can also be a big help when you’re setting everything up. Not to mention the dreaded taxes. It’s important that you’re not making any IRS goofs or anything. Make sure to choose a trustworthy, licensed professional who understands the towing industry. Towing is very unique, so it’s best to partner with someone who gets the ins and outs of your business. (If you need to, ask for referrals from others who might have a recommendation.)
PRO TIP: if you choose to search online, try going local by searching “accountant near me” in Google for a list of local results. Also, if you go with a cloud-based accounting software, many of these applications have a list of verified accountants who spealise in their software.
4. Step up your invoice game.
You also have to make sure that your invoices are organized and detailed. You can think about getting 3-copy invoice booklets that have your company’s name and logo on them. (A pro tip is that you should make sure that your invoice numbers will still be sequential when you order new books – you don’t want to start all over again at Invoice 1 if you’ve just used Invoice 300.)
REMEMBER: Keep up with all your invoices – don’t forget to write things down! We all like to think we have the memories of elephants, but we forget things.
5. Remember that the account balance doesn’t reflect the big picture.
Week by week and month by month, things are going to look different as far as your account balance goes. You might have more expenses in one particular week, so when you go to see how you’re standing financially, look at the big picture. Don’t just look at the number and panic. You’ve got to go over your expenses, income, and so on and give yourself a truer idea of where you stand.
6. Be organized and uniform.
It’s also important to stay organized and to keep all of your invoices and records uniform. When you come up with the labels for your income sources (cash calls, etc.) and expenses (i.e. fuel, insurance, tires), keep with them. Make sure that the way you enter your invoices is the same each time. You’ve got to keep up with the detail in your records and you’ve got to stick to your methodology. It might feel like it takes more time, but in the end, you’ll be thanking yourself when your invoices, expenses, and so on are all neatly labeled and easy to understand. Just get in the habit and stick with it.
PRO TIP: Several of the top accounting applications available also have mobile applications available so you can manage your books & invoices on the go.
Also, check out MileIQ for mileage tracking right from your mobile phone.
7. Remember that this can help you grow.
Keeping track of your finances can set you up for success. If you’re looking to grow your tow business, you need to have your finances in order so that you have a firm foundation.
Another part of having a tow truck business is making sure you have the right tow truck insurance. Get started with tow truck insurance quotes by filling out our online form, giving us a call, or messaging us on LiveChat.
