When launching a business, there are a variety of factors that you'll need to consider when organising your finances. Seemingly mundane tasks like bookkeeping, payments and budgeting suddenly become excruciatingly important when operating a new start-up.
It's imperative that you address the following five points listed in this article.
Set up a business bank account
If you operate as a sole trader you don't legally have to have a separate bank account for your business, as you can use your personal account. However, without one it becomes significantly harder to track your business income and expenses, so we definitely recommend opening a separate business account.
In Australia, if your business operates as a partnership, company or trust, then you must have a business account for taxation purposes.
Prepare a budget
Preparing a budget outlining your forecast income and expenses helps you manage your cash flow when starting and running your business. Simple stuff but it can be incredibly boring. We recommend seeking help from an expert.
Set up a bookkeeping system
There are many manual and electronic bookkeeping products that could suit your business. If you’ve employed a financial professional, have a chat to them about the products that will best work with their systems. At KPI Business Advisory, we're considered a 100% Xero firm. Why? Because of the many great benefits operating in the cloud brings. Contact us to learn more about making the switch to Xero.
Payment types and invoicing templates
You'll need to decide on your payment terms and payment types your customers can use. You may also need to set up an invoicing template and receipts to give your customers when selling goods and services.
It’s important to provide a correct invoice for your goods and services. Make sure to include a clear due date and follow up on payments that fall behind. If your business provides subscriptions or memberships, consider setting up an automatic payment system or direct debit. This will save you the hassle of chasing payments.
Manage your cash flow
Keep track of the money that’s coming in and going out of your business. An easy way to do this is to use a cash flow statement. A cash flow statement allows you to track your income and plan your expenses. This lets you plan ahead and feel comfortable in the knowledge that you’ll have the money to pay your bills.
It’s important to schedule time to sit down and go over your business finances regularly. Your income and expenses will fluctuate, so it’s best to stay on top of things by checking in often. Add a weekly finance meeting to your calendar so you can stay organized and avoid falling behind on things.
When you fall off the wagon with your business finances, it makes it difficult to stay productive and understand what’s truly going on with your situation. This can allow burdens like debt to creep in and deter you from financial success with your business.
If you do feel like you're falling off the wagon, please don't hesitate to contact us. KPI Business Advisory provides accounting services in Adelaide that goes beyond the bookkeeping basics. We provide you with proactive advice that will improve your efficiencies and allow you to make smarter financial decisions.