How to stay on top of your business finances
One of the biggest headaches that many business owners come across is managing to keep on top of their finances. Business owners can find it extremely stressful managing the company finances, as their financial position, really can be the making or breaking point for many small businesses.
The daily challenges that many small business owners will come across are firstly building a customer base to being a one-man band. When you are a business owner you will have to be capable of covering all the areas of running your business from managing your finances to marketing and customer service. The survival of your small business will rely on this.
To successfully manage all areas of your business you need to be highly organised and ensure you are giving enough attention to all areas, as this will ensure you and your business will survive. Here is some advice on how you can effectively manage your finances to ensure the success of your small business.
Keeping on top of your taxes
It is vital that as a small business that you keep on top of your taxes and it is
recommended that you get the help and advice of an accountant to help you with your taxation and record keeping. To keep on top of your taxes you need to mark all the relevant dates in your diary. For example, here are the important dates for small
Your tax commitments will vary depending on the business that you run and whether or not you employee others. It is essential that you put enough money away to pay what you owe in your taxes when they are due for payment. As a rule of thumb, it is recommended that you put aside at least 20% each month.
It is important that you have a business budget to ensure you can keep on top of your business expenditure. Your budget will give you a clear perspective of all the figures that you need to keep an eye on. It can help you see if you need to cut any business costs, or where money can be saved, as well as helping you see how much you can afford to spend on certain things. Ideally, you need to be regularly looking at and updating your budget to ensure that it’s a continuously updated, working document.
The importance of cash flow
You need to make sure that you have a steady cash flow for your business, as poor management of your cash flow will have a detrimental effect on your businesses outlook. Essentially, cash flow is the money you have at a given time. To ensure you have good cash flow you need to make sure you have the money before paying out and that invoices are paid to you on time. Late payments will likely result in your business struggling and maybe even closing, so you need to ensure that you are doing everything that you can to have a steady flow of cash.
As a business owner, you need to constantly be keeping track of your business expenses as this will be an indicator of when you need to spend some money, and when you need to look at holding back. A way of doing this is to use a credit card, as when you’re doing your taxes and claiming relief on business expenses, you will have a clear record of everything you have spent.
Your budget will also contribute to helping you manage your business expenses as if you need to buy something for the business it will show you when and where the money needs to be spent.
Lastly, accounting software can be very useful and help you keep an eye on your business finances. There is a variety of accounting software options available and by doing some research you find the one that is right for you.