Managing Your Finances as a Business Owner | AD

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As a business owner, it’s crucial that you keep tabs on your finances if you want to guarantee stability and success. You might need to hire an accountant to help and at least understand some of the basics, like how to apply for a loan. Make sure you’re clued up on all of the terminology like the different taxes involved, VAT and PAYE. It might be worth enrolling in an accountancy course to help you understand and feel more in control, as things like this can feel quite overwhelming.

How much tax you pay and what type of bank account you should have will depend on the type of business you operate. For example, all limited companies are legally required to have a business account rather than being paid directly into a personal account. Sole traders don’t have to, but it might be beneficial anyway to keep everything organised. There’s accounting software that you could consider so that you don’t have to drown in paperwork or chase invoices, even if your business is something quite unique, like a farm, there is farm VAT software that can help you keep things under control.

Be sure to keep an eye on your cashflow at all times, either using your accounting software or by manually creating a cashflow statement. The idea is to monitor how much money is coming in and how much is going out so that you don’t get yourself into debt and risk losing your company.  You might be inclined to invest all your profits back into the company to help it thrive, but make sure you pay yourself first; you should be compensated fairly for the input you have in your business operations.

You’ll also need to get into the habit of planning ahead. Random issues will crop up from time to time so it’s worth having a savings fund rather than relying on things like credit cards to cover unforeseen costs. It’s important to think long-term and always prepare for the worst so that you don’t end up getting yourself into a sticky situation.