Keeping your business finances in order as a new or small business can be hard and inconsistent if you don’t have a financial plan, a financial plan goes a long way in protecting the financial health of your business. Whereas it is a major key to always keep up with your finances to help you mitigate fraud or risk.
Accurate Payroll Founder Mona Murahwa with a background in Management Consulting shares tips for small and medium enterprises about the importance of having a financial plan to sustain a business. ‘’When running a business it is highly important to have a plan of action, there will always be business issues that need to be addressed today, which needs you to prepare beforehand, when it comes to your finances, you need to plan for the future to avoid getting into bad investments and debts, said Mona Murahwa.
Have a plan
The first thing about a business is to have a detailed financial plan that includes product funding, budgeting, loan repayments, cash flow, salaries, risk management, sales projections, profit margins, and break-even points. All these will benefit you in having a clear vision of how much your business has which will help you when structuring your disaster recovery plan for your business.
Keep your finances separate
Never make the mistake of mixing your finances and your business finances. Always keep them separate to make your bookkeeping easier, this will allow you to maintain your credit score while building up a great business credit record.
Get Tax advice
Whether the business is big or small, as a business owner you must be aware of the tax obligations of running a business. Many businesses have different tax compliance rules, tax incentives, and tax rates that apply to different entities, whereas you need to be sure that the entity you have chosen for your business will have different tax consequences.
Monitor your books
This is an obvious practice, but a very important one. Do your best to set aside time each day or month to review and monitor your books, even if you’re working with a bookkeeper. It will allow you to become more familiar with the finances of your business, but also provide you with a window into potential financial crime.
Learn more accounting basics
Understanding the fundamentals of accounting basic accounting is a vital skill to have if you want to run your business properly. It is not necessary to have a financial background but you must learn new tactics along the way. Establishing internal financial protocols, and setting time aside to review and update your financial information will minimise the chances of theft and fraud which will protect the financial health of your business.
Set up good financial habits
Measure your expenditures and return on investments to get a clear picture of which investment makes sense and which ones are worth your while. Being a small business owner requires you to be wary of where the business money is spent on.
Keep good business credit
As your business starts to grow and generate profits, you may now begin to upgrade your lifestyle, the need to splash out a little, and try to avoid being lured into a false sense of security, that may put your business’s financial status in a crisis or debts. At all costs avoid taking out loans with interest rates that you cannot afford and only seek funding that you can quickly and easily repay. Always have a personal emergency fund.
Protect your earnings
Remember that you are always working hard to keep your business afloat, and pay yourself an income to secure an income protection benefit in the event of permanent or temporary disability. An income protector effectively insures your earnings should you become ill or disabled that way you will not be using the money from the business, but you have invested in yourself and your health difficulties will not affect the future of your business.
‘’As a business owner, keeping tabs on these tips from time to time, will help you in reflecting about your financial plans to work for you not against you, keeping a good financial track lessens worry about sustaining a business’’, said Mona Murahwa.