Keeping personal and business finances separate is the first rule in managing business finances. Treat your business as a separate financial entity with its own receivables and expenses. You may personally lend money to your business or withdraw money from your business, but those transactions must be purposeful and clearly documented.
Open a business checking account. Use that account's checks or debit card for virtually all business expenses. Doing this will give you a paper trail for expenses so you won't be caught short at tax time. With debit cards so widely accepted, there is little need for petty cash in today's market. If you do choose to keep petty cash for small expenses like tips, keep the amount small and document how you use the cash.
Set up an accounting system to manage business finances. Intuit's QuickBooks is flexible enough to work with micro- to medium-sized businesses, and most accountants are set up to work with it easily. If you use QuickBooks or a comparable system and work with an accountant quarterly or even annually, you can simply transmit your financial file.
Decide whether and how you want to take money out of your business. Your business can set you up as an employee and pay you a salary. With this method your business will need to withhold taxes and provide a W-2, as with any employee. Your business can pay you as a consultant. The business will not have to withhold taxes from the payment, but you will have personal tax liability for any earned income. If you are treated as a consultant the business will need to provide you with a 1099 Form at the end of the year. You may also take profits from your business, quarterly or annually.
Develop a relationship with an accountant and have him review your finances periodically to ensure that you are meeting state and federal taxing and reporting guidelines. If your business has W-2 employees, using a good payroll service will save headaches, and probably money, in the long run.