10 Tips to Stay On-Top of Your Expenses When Starting a New Business
Accounts and bookkeeping are notoriously tedious and difficult aspects of starting a new business. However, understanding and implementing systems for these processes is critical to ensuring your new business’ success. Accountants in geelong will ensure that your accounts are balanced, prepared for tax purposes and the financial health of your business is monitored. Here are 10 other ways to stay on top of your expenses when starting a new business and boost your financial efficiency:
1. Hire an accountant
It is critical to receive a professional overview of your business accounts from a trusted and ongoing partnership with a financial advisor. Whilst it is tempting to do it yourself, this never becomes a cost efficient process. The experience and industry specific knowledge of an accountant will save you money and ensure that you are abiding by tax and other laws. Keeping organised records of your transactions will mean fewer billable hours for your business.
2. Create a Budget
One of the first steps any new business owner should take is creating a budget. Calculating your monthly income, expenses and spending money is a great way of recognizing when businesses expenses may need to be cut to ensure that your income is more than your outgoing money. A budget should be updated regularly and in consultation with a financial advisor as your business expenses change and your business grows.
3. Keep a record of your business expenses and income
It is vital to document all financial transactions and business expenses incurred. Whilst this may seem difficult and time consuming, services such as automated bookkeeping have simplified this process. An automated system saves you time, reduces paper files and is more accurate than manual processes.
4. Structure your bank accounts
When starting a business, it is important to first create a separate business bank account for your business transactions. Mixing business and private transactions is a common and costly error made by new business owners.
5. Set Up Auto-Pay
Auto-pay is one of the technology innovations created by banks to make financial processes easier for businesses. You should contact your financial institution in order to set up auto-pay for your bills. This means that money will automatically be deducted from your account on the set dates and paid to nominated bank accounts. Auto-pay ensures that you stay on top of your bills and that they are paid in time to avoid costly late fees.
6. Set reminders for your receivables
Failure to collect your receivables in time will result in cash flow problems for your new business. It is therefore critical to ensure that you have a system in place for recording when your customers have paid and to keep track of any debts that have remained unpaid. Setting reminders for receivables ensures that you keep on track of any money owed to you so that you can chase up unpaid fees efficiently and promptly.
7. Consider your staff
Labour fees will mostly likely become one of your biggest business expenses. Make sure you are constantly tracking and recording the costs of wages, overtime, sick leave and other benefits that are paid to your staff. It is also important to set a fixed date for paying your employees and ensure you are withholding the right amount of taxes.Keeping track of your labour expenses can help you make better decisions for the employment structure of your business.
8. Develop an invoicing system
Developing an efficient invoicing system is a cornerstone of running a financially successful business. If the invoice is for tax purposes there are number of things that need to be included in order for it to be valid and to ensure you claim your full tax entitlement. Speaking with a financial advisor can ensure your invoicing system is efficient and complete.
9. Save money for unexpected expenses
When starting a new business you are likely to encounter numerous unexpected expenses that may not be part of your budget. Having an ‘emergency’ fund, or simply ensuring that your budget accounts for any unexpected costs, ensures that your business won’t go under simply because of an unexpected and costly expense.
10. Regularly review your accounts and plan ahead
It is important to schedule time to regularly review your accounts in order to anticipate problems and ensure your expenses are up to date as your business expands. Planning ahead will enable you to set realistic financial goals for your business and will also help you track when the best time for expansion or cutting back may be.
Hiring an accountant and following these simple tips are the first steps to ensuring you stay on top of your expenses when starting a new business. Preparing a budget and monitoring your financial health is key to ensuring the longevity and success of your business.
