Managing your business finances is vital to the success of the business. The problem is that many small business owners do not know how to manage their business finances as this is very different to personal finance. If you are unsure, it is recommended that you ask for help and advice from a professional, but there are other pieces of advice that you can also use.
Separate Your Personal And Business Accounts
When you start a small business, it is tempting to simply use your personal bank account for the business. This is actually something that you should avoid because it can cause major problems in the long-run. It is better to start a business bank account as soon as you start your business.
This ensures that you always know how much money your business has available. You will also never be tempted to use of the business money for personal reasons because it is in a different account. Having separate accounts will also make it easier to determine your tax.
Get Qualified Financial Professionals
There are 2 financial professionals that you need to have working with your small business. The first is a bookkeeper and the second is an accountant. Unless you have financial training, you should not try to complete the accounts of your business on your own. You also do not have to hire a full-time bookkeeper or accountant as there are many professionals that offer their services remotely.
A qualified bookkeeper is essential because they will take care of the daily record keeping of transactions for the business. While you can get software to help with this, there are certain aspects of bookkeeping that you will not be aware of. You will also save a lot of time by hiring someone so you can focus on other aspects of the business.
A qualified accountant will be able to help you with your overall finances and will be able to submit your tax to HMRC. Accountants also help you with other aspects of your business such as certain decisions which will impact your cash flow.
Monitor And Measure Your Financial Performance
While hiring professionals to help you with your finance tasks is important, you should also keep track of everything. Monitoring and measuring your financial performance allows you to determine how well your business is actually doing and for law firms for example, this is where legal accounting software from Quill will definitely help. There is no point in running a business if you are not making any money and are not aware of this fact.
Each financial year, you should set goals for your business in terms of the financial performance. You can then measure your progress towards these goals. When monitoring your financial performance, you will also be able to see what business activities yield the best returns.
There is a lot of advice that you can use to manage your small business finances. The most important piece of information is to hire professionals to help you as they can advise you in the future based on their understanding of your business.