In the current economic climate, effectively managing your business finances is more important than ever. Below are ten useful tips to help you manage your business finances:
Keep a record of your transactions
Always keep an accurate record of your transactions. Whether it’s for an annual tax payment, a yearly audit, or just assessing your balance sheet, keeping a record of your debit and credits can prove to be very important further on down the line.
Keep personal and business accounts separate
Separating your personal accounts from your business accounts will save you from confusion and protect your business in case of a tax audit. By keeping everything separate, you will be able to manage bills and taxes more efficiently.
Protect your personal assets
It’s important that you take action to protect your personal assets, failure to do so may give creditors access to personal assets such as your house car etc. to pay for any debts. Many entrepreneurs put all of their assets on the line, and if their business fails, they don’t recover anything. But there are a number of ways to minimize any risk; you can do this by formal a legal business entity that will provide you with liability protection.
Save as much as possible
You should try to save as much money as possible each month, whether it’s in a bank or assets to recoup any unfortunate liabilities which may arise in the future. Investing in assets that will provide a return will also make your money work for your business.
Plan your finances
Financial planning is more important than ever. It will determine how much money you will need to meet your financial goals and objectives.Accountants are your closest allies when it comes to strategically planning and managing your finances. If you don’t have the budget to hire the services of an accountant, consider using online accountancy software.
Know your financial situation
You should monitor the financial progress of your business on a weekly basis. You should also know exactly how much money you have in the bank, the amount of sales your making and how much stock you have left. At the end of every month you should review your financial position against the targets that were set in your business plan.
Find a reliable bank to partner your business
If you have a limited amount of capital, you should find a reliable bank that are able to provide you with the right financial help without paying high interest rates. It’s also recommended that you open a checking account. But only use the checking account for business purposes.
Charge what your worth
This can be tough for some businesses. Don’t try to undercut other businesses just to get extra work in, charge what you feel your products or services are worth.
Meet tax deadlines
Failure to submit tax returns and payments on time can be very costly as you’ll incur hefty fines and daily charges. These are unnecessary costs that you can avoid via forward planning. There are a number of ways that you can reduce your tax reliabilities and it’s important that you get the correct tax advice to ensure you take full advantage of them.
Chase any unpaid debts
If you have any unpaid debts, don’t just leave them. It’s your money that’s tied up in someone else’s business and it’s likely that you’re not in business to finance theirs. You can write your own first reminder and final demand letters, but if this doesn’t get you anywhere you may need to use a debt collection service.
Note: This is a guest post by David at Graham Paul Accountants, a chartered accountancy based in Cardiff.