Setting up a small business is an exciting yet daunting step in your career. You want to see how far it can go and you’re willing to work your socks off to take it to the top. However, if you don’t have a tight grip on your finances, your hard graft could go to waste.
With a constantly fluctuating economic climate and frequent changes in tax laws, it can be difficult to stay on top of your business finances. Large corporations have comprehensive financial systems in place – so why should a small business be any different? After all, if you want to expand and be successful, you’ve got to join the big guns and organise your finances, just like they do. Here are our four top tips for getting started with small business finances:
Form a limited company
If you haven’t already done so, setting up as a limited company is the best way to keep on top of your business’ finances. Although taking the sole trader route is simpler, if you expect your business to expand over time then operating as a limited company is a surefire way to shelter you from financial risks and have scope for growth. You’ll be protected from liabilities spilling over into your personal finances- essential if you ever run into any legal issues. Corporation tax is also slightly less than personal tax, so you’ll save some expenditure there too!
Separate your finances
When you’re running a business, it’s important to keep your personal finances out of the mix. This may sound obvious, but it’s very easy for your personal and business savings to merge – if you own a cafe and you run out of something in the kitchen, you might pop to the shop and accidentally pay for something with your own card. These expenses can not only quickly add up, but everything on company money must be recorded for tax reasons, so it’s vital that you keep them separate. Set up a bank and savings account solely for business purposes and make sure the cards are kept independently.
Consider how you’ll receive payments
As a business owner, you’ll hopefully be taking in a healthy flow of payments, but it’s important to get this right. If you offer services – for example, a cleaning business or maintenance service – you’re most likely going to send your customers invoices. Meanwhile, if you run a fast cash flow organisation like a cafe or restaurant, a card machine is much more suitable. Bear in mind the costs – card machines are priced between £30-£300 and you’ll have to pay ongoing transaction fees to the provider. Processing invoices also comes with costs, so work out which payment system will work best for you.
Hire a professional accounting service
Although your business is your baby and you want to take control of everything, one of the most important skills you’ll learn as a business owner is understanding where your strengths lie and where outside expertise can help. For most people, managing finances lies in the latter category. A professional accounting service can assist you in all areas of business finances, including payroll and bookkeeping, advice on budgeting and tax and setting up as a limited company. By passing the finance baton onto an expert, you can focus on what you do best and your business will soon become a success.
Are you taking on a new business venture in Birmingham? Get in touch with Barron & Co. We can support you with all of your business finance needs and ensure you stay comfortably above water. Give us a call on 0121 274 9108 or send us an email at admin-ac@barronandco.co.uk today.