Whether you are new to business or been in business for many years, you appreciate the fact that your business will not exist without cash flowing through it. Cash comes in from the sales you make and it goes out as you buy stock, pay employees and operating expenses. Organising your business finances is therefore critical to ensuring that your business not only remains healthy but also grows. Here a 6 things you can do to organise the finances in your business.
1. Have a budget
As the quote goes “A budget is telling your money where to go instead of wondering where it went.” —John C. Maxwell Get in touch with us and we can assist you formulate a budget for your business as a start!
2. Monitor your finances
It’s no secret that Xero is our recommended tool to manage your business finances. Our clients use Xero and they love how easy it is to use and understand. Not only that, because data is up to date (we’re the experts in that if you didn’t know ????), monitoring your business performance and making business decisions is so much more easier.
3. Keep track of your documents
There is nothing more frustrating than looking for a document/receipt when your accountant or SARS requests for it. There are many tools out there like Expensify and Hubdoc that help you manage your receipts and documents easily and efficiently. You can say “no” to paper and save the planet at the same time.
4. Keep your personal and business finances separate
Income tax is calculated on the net of business income and expenses. When you mix your personal and business expenses in one bank account, it becomes a challenge to separate them and prove to the tax authorities that those “business” expenses are not “personal” in nature and vice versa. Set it up right from the start. Your business cash flow must be run from a separate bank account. Period.
5. Plan for taxes and the unforeseen
There is nothing worse than not having the cash to pay your taxes on time or to tide you over slower sales periods. Some businesses have seasonal sales, but the fixed costs are not. Making sure you put aside cash for these eventualities is a discipline a business owner must develop. We recommend opening several investment bank accounts in addition to the main operating account to save these funds and be able to access them when the time comes.
6. Get a business line of credit and maintain it well
One of the biggest challenges small businesses face today is the availability of funding. We will be going into more detail on business funding later on in the year. Save to say that you should apply for a business line of credit in the form of a credit card or an overdraft, use it and maintain a good record. This not only builds your business’s credit history, but also mitigates the risk of access to finance when you need it urgently.
At SBS, we are our client’s best friend when it comes to their business. When they reach out to discuss business challenges, they are met with experience and advice suited for their specific situation.
