Working for yourself means not only do you need to market your products and services and bring in new business, but you also need to manage your own financial accounts. You have to keep on top of the money coming in and out if you want to survive the first year in business. These five tips will help.
Many entrepreneurs fail in their first year and one of the reasons is lack of cashflow. Here are a few tips to help manage your accounts and ensure you are on the right road to business success:
1) Set up one business account
You have to make sure you keep your business’ monies separate to your personal savings and current account – do not mix them up. To avoid doing so, set up a business account with your bank. For example, HSBC offer a number of additional benefits when you set up a business account with them such as an overdraft facility and a credit card. Speak to them to find out what they or other banks can do for you.
If your bank will not let you set up a dedicated business account, set up an account which you will only use to receive invoices and pay expenses for your organisation.
2) Use Your ABN on every business document
For all invoices, make sure that you clearly mark your ABN. It’s important that the company you are invoicing knows you are a legitimate business. They will also need to the ABN number of payments they make to all suppliers, as this will be part of their tax return.
3) Set aside money for tax
It can be very tempting to spend all the money you earn, but you have to remember to pay tax. Yes it’s a pain, but it’s important and if you don’t pay your taxes you can be met with serious fines. If you’re operating in Australia for less than 6 months, you will be taxed as a non-resident or at around 29 percent. If however, you have been trading for longer than six months, (which hoping your business is a success, it will be) you will have to set aside a lower percentage for tax – but again it all depends on how much you earn.
Visit the Australian Tax Office to find out how much you need to pay weekly or monthly.
4) Record your expenses weekly
Before you finish for the week, make a note of the expenses you have incurred. Don’t just wait until the end of the tax year to file your expenses, as this can make it very difficult to keep track of what you have spent for the company and what you may have just spent for yourself – you cannot mix the two. A business expense is a cost you have incurred through your organisation, this can be taking the train into the city for a meeting, attending a conference, going out for lunch during the conference, but not a four course meal.
5) Contact an accountant
As you are managing your own accounts, you may want to check a few details with an accountant. It is useful to speak to an accountant before you start trading to help you organise your accounts making it easy to do your tax returns when required.
There are many self-help websites for entrepreneurs setting up in business. If you need a website designed, a brochure or even business cards, there are local services on hand to help. For those living in Sydney, Sydney printing services lets you get started with marketing your business, one of the most important stages in helping to bring in clients. Then you can start managing your own accounts, which will then help you to bring in the clients.