Owning a business is both challenging and rewarding, especially when it comes to the financial aspect. If you’re not particularly clued up on accountancy, managing your finances can be confusing and potentially stressful, but it’s essential to keep on top of your outgoings and income so that you don’t end up with any unforeseen debt. Start by doing some research, or perhaps an accountancy course, so that you can learn how to draft a financial statement, apply for a loan or submit your tax returns. You’ll also need to learn some new terminology, like PAYE, VAT, or corporation tax, for example.
Set Up a Business Bank Account
It would be a smart move to set up a separate business bank account, even if you’re not set up as a limited company, because this will allow you to differentiate between your personal finances and your business finances. This will make it easier to monitor your expenditures and therefore ensure your tax returns are as straightforward as they can possible be.
Use Accountancy Software
It may also benefit you to invest in some accountancy software. Even if your business is quite unique, like a farm for instance, there is farm management software that will allow you to keep everything in order. This type of software is regularly used in conjunction with an expert accountant, who will be able to monitor your finances more closely and perhaps even prepare forecasts so that you can gain some insight into where you’ll be in the next six months or a year.
Pay Yourself a Salary
Of course, as a business owner it can be easy to invest any money back into the company and, while seeking out growth opportunities is important, it’s also crucial that you are compensated fairly for your hard work. Pay yourself a sensible salary that also leaves you with spare cash to save or reinvest.
Try and be savvy with your money and cut costs where possible. You might not need the most expensive furniture and gadgets for your office, and you don’t have to travel first class when attending meetings. It would be better to save your pennies and look for cheaper alternatives where you can. Try and find ways to boost employee productivity so that you’re getting the most for your money!
Be prepared for any unforeseen issues and random financial problems so that you are in a position to deal with them without too many repercussions. It’s always a good idea to have a rainy-day fund so that you don’t have to rely on overdrafts or loans to pay things off. You should also have a cashflow statement that will allow you to observe your outgoings and ensure you have enough money to continue operating successfully.