Owning a business can be very rewarding, but it often gets complicated where finances are concerned. No matter how daunting, business owners should pay close attention to their finances to ensure their company continues to grow. You may have to use some accounts software or hire a professional to help but it will be worth it if you want to successfully monitor your profits and outgoings. First of all, you’ll need to have a separate business bank account to your personal account, which is required by law for limited companies, but also handy for sole traders. You will need to submit your tax returns, which will be easier to manage if your personal and business accounts are distinct.
Try and keep your eye on cashflow, perhaps with the help of a cashflow statement and forecast. If you use accounts software, there will possibly be functionality to do this for you, but they are not too tricky to create yourself if not. Keeping an eye on your cashflow will help you prepare for the worst, which is important because it means that you can take out a loan if necessary or cut back on spending if you need to. It also a good idea to keep some savings to one side, just in case there are any unexpected fees.
Be sure to pay yourself. It’s always tempting as a business owner to invest any money back into the company to encourage growth, but you also deserve to be compensated for your hard work. After all, you play an integral role in the company. It would also be helpful for you to learn a bit about accounting, even if you have an accountant, so that you understand what’s going on. It’s important for you to understand some of the key terms like PAYE, VAT, and the different types of tax.