Although many businesspeople have accountants, it’s quite often the case that in the early days, it’s not a financially viable option. Of course, when companies grow and their incomes multiply it makes financial sense to employ an accountant to sort out the money side of things, but until things get to that stage, what do you do? If you’ve never been in the financial sector, it can be difficult to know how to best organise your money — but there are ways of making it easier. If this sounds like a familiar situation, or even if you’re just interested in starting up a small business in the future, here are some top tips on how you can better organise your finances within your small business.
Separate Your Personal and Business Finances
It doesn’t matter whether your startup is a property company like Ready Steady Sell, or if you’re a makeup artist going freelance — it’s equally important to separate your personal finances from your business finances.
It might seem okay bundling everything together initially, but when it comes to tax return time, you’re going to struggle massively if you haven’t separated your finances. All self-employed people have to contribute to a tax return if they’re making over a certain amount of money — just like all other employed people. Before you take the plunge, it’s a good idea to do your research and split your finances accordingly.
Of course, that’s not the only reason you’ll want to separate your money into several accounts. Some of the money you make from your own business WILL be personal money, and it’ll be your wage to do as you wish with, however, some of that money will have to go back into the business if you want it to grow accordingly.
Simply create a business account, and use that for all of your working matters.
Track Your Expenses
Another important thing to do when starting up a small business is to vigilantly track your expenses.
In order to keep the business running, there are certain expenses you’ll have to make. These could be regarding marketing, advertising, employees, taxes and more — but by law, and for the overall success of your venture, these expenses have to be made.
However, do keep track of them. If there’s a cheaper way of making the same expense, see if it’s viable. Likewise, it helps you to ensure that you’re not making wasteful expenditure either. In the long term, you might be able to be a bit less strict on this, but in the early stages you have to be so careful about where your money is going, in relation to how much the company is making. You can expect that in the initial stages of business, you’ll have more outgoings than incomings — and that’s a given. However, if you track these accordingly and organise your finances in relativity, hopefully your incomings will skyrocket in the coming months and years.
Track Your Income
As well as tracking what you’re spending, it’s of course important to keep an eye on what’s coming in as well.
This could be on a weekly or monthly basis — but in the earlier days it’s important to keep as close an eye as possible, so it might be an idea to start off with weekly tracking.
Tracking your income is so important, because it enables you to see how well your business is doing on the whole. You can see where you’re making money in comparison to where you’re perhaps making it, and you can figure out what the most fruitful time of the year and/or month is for your company in particular. You can also keep an eye on whether there is a steady incline — which there should be.
By tracking your income, you enable yourself to see what extra expenses you can afford to make, and where perhaps you might have to think about cutting back.
Keep Copies of Financial Records
Last of all, but certainly not least, try and keep an organised record of all of your finances.
A lot of the time now, digital receipts are the go-to for finances — however, it never hurts to have a paper copy too. It doesn’t matter whether it’s receipts, invoices, or records of accounting and bookkeeping. Try and have a digital and a hard copy of each, and have them organised by date and year. This way when it comes to the financial year, you’ll never be left searching for all of your records, because they’ll be ready and waiting.
