How you can stay on top of your business finances
One of the biggest stresses for small business owners is maintaining control over their finances. This is because financial security will determine the success and future of the business. Small business owners face many challenges ranging from building and sustaining a customer base to managing staff through to producing and delivering high quality products. As the owner of a business, you are required to wear multiple hats to ensure the business keeps running. However, managing your finances may be critical to the livelihood of your company.
Below, we explore how you can effectively keep on top your finances to ensure your business’ success.
Stay in control of your taxes
As a small business, you will need to ensure you stay on top of your finances, therefore it is recommended you seek advice and help from a small business accountant to aid with complex tax calculations. It is advised to mark all relevant and important tax dates on your calendar. The dates to keep in mind for 2019 are:
- Thursday 31st January – Online self-assessment tax return deadline (for tax year 2017/18)
- Monday 1st April – Submit VAT returns digitally as part of the Making Tax Digital scheme
- Friday 5th April – The tax year 2018/19 ends
- Saturday 6th April – The tax year 2019/20 begins
The type of business you run and whether you have employees or not will determine your tax obligation. Throughout the year you need to ensure you are keeping funds aside in order to pay your taxes when they are due. The recommendation is to put aside at least 20% each month – this is vital, if carried out properly each month, to guarantee the financial security of your business by the end of the tax year.
Creating and controlling a budget is crucial in keeping track of your finances, from profits to expenses. A budget will give you a clear perspective of the numbers you need to focus on and enable you to record all necessary data. This budget will enable you to understand what business costs need cut or potential ways to save money. It will also assist in managing how much, and when, you can afford to spend on certain costs. Regularly revisiting and updating your budget is important, especially if there are changes to cash flow as this will drive your company in a certain direction. To keep you in control, your budget should be a working document which is continually updated.
It is imperative that you have a steady cash flow for your business as poor cash flow management can result in hugely negative consequences. Ultimately, cash flow is the money your business holds at any given time so, simply put, you must ensure you have money before you pay it out and that invoices are paid to you on time. There has been countless business closures due to the late payment culture in the UK so for the success of your business, make sure you are doing everything in your power to maintain a steady cash flow.
Keeping track of your business expenses will allow you to identify when you need to spend money and when you need to refrain. An effective way to track your business expenses is by using a credit card. Credit card statements allow you to have a record of everything spent which is beneficial when it comes to completing your taxes and claiming relief on expenses. A budget will also help in managing business expenses as it will aid in prioritising where and when money should be spent.
Accounting Software is advantageous to help you oversee the financial activity of your business. There are many accounting software options available so in order to find the right one for your business you will need to do a bit of research. Most accounting software includes features like invoice procedures, scheduling, reminders and a place to obtain various data and reports on your finances.