Keeping your business finances in order

Keeping your business finances in order

Financial data analyzing. Counting on calculator

Running your own business can be very rewarding, both in the freedom it offers and the financial benefits. However, many small businesses fail within the first year and one of the main reasons for failure is a cash flow problem.

Many individuals when thinking about running their own business focus on the actual business rather than the financial aspects, but keeping your finances in order is very important if a business is to succeed. Make handling your income easier by never mixing business finances with personal finances, and business accounts and credit cards should be kept separate and only used for genuine business expenses. This will make it much easier to keep track of where the money is going. There are many different business bank accounts and you should shop around and compare fees to ensure you get the best deal. Keep track of your business expenses as some will be tax deductible and you could save a lot of money by making sure that all expenses are properly recorded.

Remember to set aside time to administer your finances. It might seem like a chore, but keeping your financial records up-to-date will make it easier to make informed decisions.

You can develop your own bookkeeping system and there are many online bookkeeping sites that will help you. However, you might want to consider using professional accountants. This might seem like an expense a new business should avoid, but a professional accountant will not only be able to ensure that your accounts are up-to-date and accurate they will also be able to advise you on ways you can save money. They will also ensure that your business does not fall foul of any tax regulations thus avoiding unnecessary fines.

If you employ any workers you will also need to keep track of wages, benefits and other costs associated with labor. Labor is one of the biggest costs to a business and so keeping on top of your wage bill is very important.

It is understood that one of the most important tasks a business has to do is invoicing clients. Clients or customers of the business should receive an invoice in a timely fashion. A small business can fail if its customers do not pay their bills on time. Ensuring that you have a good invoicing system in place will encourage your clients to pay by the due date. You do not have to design your own invoices because there are easy to use invoice templates available online that will make the task much simpler. Using an online invoice template is a quick and easy way of creating all your invoices.

As well as considering tax, expenses and wage bills you may also have to consider import taxes if you are importing goods from abroad, and your payment methods. For example will your business accept credit cards or just cash?

Setting up your own business can be an exciting venture, but many small businesses founder during the early years due to financial problems. Keeping your business finances in order is one of the most important tasks you will undertake in your new business, and if done correctly and expeditiously it will help your business succeed.