Starting A Business? Here’s How To Get Your Finances On Track From Day One

Starting your own business comes with an abundance of rewards. You’re your own boss, after all, so you call the shots and define your own schedule. But you’ll have your fair share of tests and obstacles to overcome. 

For many new business owners, their finances are the most significant source of stress. It only takes a few mistakes for them to become an untamable beast. So getting a good handle on them at the start is integral to success. 

Here you’ll discover how to get your business finances on the right track from the get-go and take control of your future.

Have A Business Account

Before you even start thinking about your business finances and accounting, you need to open a business account. It often feels easier to mix personal and business finances, especially at the start of your small business when it’s only you behind the wheel. But it leads to confusion and undue stress when it comes to balancing the books. 

Get a headstart by having an account dedicated to your business. It’s much easier to track expenses and forecast profit when you don’t have to sift through several incomings and outgoings. 

Create A Budget

Budgeting isn’t a fun job. But it’s crucial to have one set up to effectively manage cash flow. Include a list of projected revenue and expenses. Set it up as a monthly or yearly forecast, or both, whichever suits you and your company the best. 

Having a budget set in stone enables you to plan for the future, avoid any nasty surprises and identify areas that need some extra work on your part. It’s essential to be as accurate with these numbers as possible. Once money starts coming and going from your account, compare the figures against your budgeted projections. Then adjust the budget accordingly. The budget should grow and change alongside your business.

Get A Handle On Bookkeeping

It’s absolutely critical that you keep a record of income and expenses from the get-go. If you try to start it up halfway through the financial year, you’ll make mistakes. And mistakes will cost you thousand. There are plenty of free bookkeeping resources online, so there’s no excuse for not having it sorted. Many of them even allow you to create reports that’ll help you manage cash flow better and maximize profits.

Alongside setting up your books, you should project your cash flow. Cash flow issues, like tax-related expenses, are one of the primary sources of failure for new and small businesses. In your cash flow projection, include start-up costs, financing, sales, and expenses forecasts. As you do with your budget, compare this with a cash flow statement once the money starts coming in.

Have A Profit/Loss Statement

Track your finances on a weekly and monthly basis. Every month and year, prepare a profit and loss statement based on your cash flow statement. This will provide you with data on how well you’re managing the business’s finances and areas that would benefit from tightening the purse strings. It also lets you see how profitable your business is. This information is vital to evaluating and evolving the company effectively. 

Be Prepared For Taxes

Tax season comes around every year, so you shouldn’t be surprised by them. Not paying the correct tax or being prepared for it will cost you precious time and money. So set up tax accounts as soon as you start the business and stay on top of them. Find out what taxes apply to you by doing thorough research. A good rule of thumb is to overestimate the amount of tax you’ll need to pay. It saves you from nasty surprises and expenses that you haven’t budgeted for.

Hire A Professional

Sure, in the initial stages of your new business, you’ll be able to keep on top of finances yourself if you’re thorough. But if you’re not a numbers person or the business is growing, hire a professional. You will need a bookkeeper, accountant, or specific small business accountants to handle your finances. They’ll balance the books for you, stay on top of tax, and if you opt for an accountant, they can give you priceless business advice.

A Few Tips To Keep You On Top Of Your Finances

So you’ve done the hard work and set your financial situation up for success. But finances need to be routinely assessed to truly stay on top of them. Here are a few bonus tips that’ll keep you above water when it comes to money.

Pay Yourself

Many new and small business owners neglect to pay themselves. After all, that extra money pumped into the business can only lead to success and growth. And it is crucial to get the company up and running. But if you neglect to pay yourself and the business fails, you’ll never have got anything out of it. You are part of the business and need to compensate yourself and your time accordingly.

Don’t Be Afraid Of Loans

Loans are scary. And the prospect of not being prepared to pay them back if anything goes wrong is more terrifying. However, an influx of capital from loans instantly boosts your cash flow and reduces supplier and employee payment issues. If you are worried about your loan, get in touch with your provider. They want your continued business, so they will help more than you think. 

Monitor Your Books

Once your books are all set up, and you have an accountant managing them, often you’ll be lulled into a false sense of security. But you still need to monitor your books, frequently. Making this a regular practice allows you to identify problem areas and areas that can be expanded. It all leads to good business sense. 

Plan Ahead

You will have business problems that need to be ironed out every day. But when it comes to your finances, you need to plan for the future of your business. If you’re not looking 5 years into the future, then you’ll always be behind your competition.

This is a contributed post.