When it comes to business start-up advice, knowing how to manage your finances is one of the most crucial areas on which you need to concentrate. It’s not simply a case of setting up an Income and Expenditure account. There’s also the not-so-little matter of VAT, depreciation and loss of fixed assets. There may even be salaries that you have to manage.
At Taxago, we have extensive experience in helping small businesses with their finances. Below, we’ve listed some key small business start-up advice that will ensure your business can grow successfully.
Keep business and personal accounts separate
Not only does having individual accounts make sense in terms of knowing exactly how much money you have for your business, but it also makes accounting much more manageable. Opening a business bank account will also give you the option of credit further down the line. Some banks provide business accounts designed specifically for start-ups or sole traders, so it’s worth searching around for the best deal. Make sure you have a credit card for your business account, too, as this helps you build up a credit history – something that will prove vital if you want to borrow money in future.
Invest in accounting software
One of the best pieces of small business start-up advice we can give is to invest in accounting software to help automate your bookkeeping. It saves time and makes keeping your income and expenditure in order much simpler (provided you log the correct details). Alternatively, you could use a basic spreadsheet if you want to avoid paying for accounting software. On the other hand, you could always outsource your bookkeeping. Once your business grows, it will likely make more financial sense to pay for an accountancy service anyway.
Keep good business records
You are responsible for keeping your business records for at least six years for tax purposes. If they’re on a computer, then it’s simply a case of archiving them. You can buy a receipt scanner to ensure you keep on top of your business spend; handily, this is often linked to your accounting software. Some accounting software packages can even communicate directly with your bank.
Check your accounts regularly
It’s easy to do this if you have neat records that are up to date. Even just a couple of hours at the end of every month gives you an idea of how your business is progressing and how healthy your ongoing cash flow is. Your accounting software should be able to provide a monthly report to provide this information. Good accounting also makes financial projecting easier – some business start-up advice which is important to any business that plans to expand. It’s also crucial if you plan on asking for a loan or additional investment further down the line.
Always be mindful of deadlines
Paying bills for your business on time means you won’t be charged interest payments. Some creditors may offer a discount for early payment, while others may have special credit, no-interest credit terms. It’s worth noting these and taking advantage of them where possible. By the same token, setting similar deadlines for clients and other payers is essential to ensure you maintain a decent cash flow.