When you start your business, it is likely that your personal and business finances become mixed and it can be hard to determine the financial success of the business. At Four Wealth Management, we work with many small business owners to create a financial plan to organise their personal and business finances.
Having a financial plan for your business in place will help you to allocate resources appropriately and determine how much you should spend in areas such as product development and marketing to accelerate your business growth.
A financial plan allows your business to grow quickly while avoiding cash-flow issues that many start-up companies face.
Below are some ways that you can start to organise your finances.
Keep a Separate Bank Account
It is important to separate your business finances and goals from your personal finances. As soon as your business begins to make money, you need to separate your personal finances from your business. This will help you to track your business income, outgoings and calculate any tax due at the end of the year.
Track your income
It is important to know how much money your business is making on a weekly and monthly basis. There are many tools you can use to help you to track this and you can monitor fluctuations.
Track your expenses
If you start tracking your business income, you also need to track your business expenses. There are many expenses that need to be paid in order to keep the business running smoothly. You can deduct certain business expenses from your tax bill which will lower your taxable income.
You should audit your expenses at the same time as you monitor your monthly income. This will help make sure you are not overspending on unnecessary costs.
Protect your business
Every business requires protection from threats, the level and type of protection will depend on your business. A Financial Adviser at Four Wealth Management can help
Each business requires its own level of protection, but you may want to consider getting some insurance or establishing an LLC or an S-Corp. Establishing an LLC or S-Corp allows you to separate your business identity and finances from your personal finances.
For example, if you ever had to undergo any legal issues, your personal property and assets would not be liable. Be sure to renew any important certifications or licenses you need to remain compliant by adding it to your calendar. Protecting your business is the best way to ensure any financial issues that may affect your business doesn’t pour into your personal assets.
Consider how you want to receive payments
Invoicing clients is a time-consuming process for many small business owners and it is likely you will need to chase some clients multiple times before receiving payment. You need to determine the best way to track outstanding invoices and set a deadline for the payment to be received.
You also need to decide how you will accept payments from clients, for example, bank transfer, credit card payments or cheque. Some options such as a cheque may require more administration and take longer for you to receive the funds. Different payment methods also have different charges.
Start financial planning for your business today
If you stop keeping track of your business finances, it can be difficult to understand how your business is performing. This can have a detrimental impact on the performance of your business.
A financial adviser at Four Wealth Management can help you with creating a long term financial plan for your business to help you achieve success.
The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances.