Running a small business comes with many challenges, but one of the most important is managing your finances effectively.
Being on top of your financial situation isn’t just about avoiding debt — it’s about giving your business the opportunity to thrive.
We have 10 top tips to help you stay in control of your finances and set your business up for success.
- Keep accurate financial records. Make it a habit to record every transaction in your accounting system. Log in at least once a week. Then you’ll always have a clear picture of your cash flow and can quickly spot any issues.
- Regularly review expenses. Business costs can pile up, and fine-tuning where your money goes can free up funds for more important investments. Keep an eye on energy costs, travel and tech to see where you could make savings.
- Plan ahead. Having a solid business plan with clear financial projections will help you anticipate challenges and set achievable goals. It’s important to keep an eye on the big picture as well as the day-to-day.
- Invest in tech. Invoicing apps can simplify the process of sending invoices, tracking payments, and even chasing late payments for you. Accounting software can help you monitor your cash flow, manage your records, and make tax filing easier.
- Separate business and personal. Separate your personal and business bank accounts. It will avoid confusion and make tracking your profits much easier. It simplifies your tax returns and gives you a clear view of your business’s financial health.
- Pay yourself first. Set aside 10% of your profit as personal earnings. It will help make sure your business is profitable and helps give you a safety net for unexpected expenses.
- Build and Maintain Positive Cash Flow – Offer early payment discounts or charge late fees to get your clients to pay on time. The sooner you are paid, the healthier your cash flow.
- Borrow while business is good. Don’t wait until your business is struggling to seek finance. Applying for a loan when your financials are in good shape will increase your chances of approval and give you more flexibility. Loans can be a great way to drive growth.
- Invest in marketing. Being clear about your audience, what they want and how to reach themis the way to grow and maintain sales. Well-planned marketing activities will quickly pay for themselves.
- Stay on top of your tax. Know which taxes apply to your business and when they’re due. Paying your taxes on time helps you avoid hefty penalties and maintain good financial standing.
If you can, put money away in a separate account every time income is received. If you receive £1,000 put away £200 and don’t touch it. This will quickly build up to cover any tax liabilities once they are due.
Good financial management is crucial for any business – and if this is something you need advice on, talk to an accountant.
As specialist small business accountants in the Lune Valley, we love to share tips on tax and financial efficiency. Contact us today with your questions and we’ll be glad to help.