If you are just starting out, hiring a bookkeeper or accountant can seem VERY daunting. You think, “but I don’t have any money for them to look at?!”. That might be true, but they can help you with a whole lot more than that.
Staying on top of your finances is super important. You need to know how much is coming in, what is going out and exactly what you are spending your money on.
So if you aren’t ready to hire an accountant (if you are click here), check out these 6 tips on bookkeeping for small businesses.
Business and personal separate
Something that you need to do early on is separate your personal from your business expenses. There are a range of low to no-fee business accounts that you can open to start separating your finances. This helps you get a clear indication on what funds are for business, and what funds are for personal. If you don’t want to open another account just quite yet, get a second card and account with your existing bank. This way your funds will still be separate! Just check with your bank if they allow you to do business transactions under your personal account. Some banks don’t like this and might not help if something was to happen (fraud transactions, stolen card etc).
Know your finances
Knowing your finances is super important when it comes to your business. Your numbers show how the business is really doing, as numbers don’t lie. Make sure you are checking your finances on at least a weekly basis and reconciling where needed. Reconciling is where you resolve any discrepancies that you find. It also is a great way of tracking if there are any outstanding client invoices or if you are overdue to pay any.
Having an accounting software helps take the headache away from manually recording transactions. If you have a program like XERO, it will collate your transactions and put them into the relevant categories so that you are able to see where your money is being spent and also helps with the point above!
Taxes, oh taxes
Everyone has to pay them, and if you are a small business owner you may not be used to putting these funds aside. Oh the days when your employer did this for you! This is something to keep in mind when you are getting money in. There are calculators that can help estimate how much tax you should be putting away, but my advice is if you aren’t sure, contact an accountant to help you! The last thing you want is a heft ATO debt. If you are also registered for GST, you will need to be wary about doing you BAS (Business Activity Statements).
Stay on top of invoices
When you are just starting out, it can be hard to push a client for their invoice to be paid. You can feel pushy, needy and you are scared they might leave. But, cash flow is super important. Make sure you have a clear ‘due by’ date with terms clearly labeled. Always make sure you plan for the worst case scenario with your T&Cs when it comes to invoices. It could save you a lot of trouble in the future!
Don’t be afraid to outsource
Finances are not something you want to just ‘hope for the best’. Not only can you get in trouble with the ATO, but not knowing where you are financially can really hurt your business.
They really aren’t that scary when you get to know them, and for a lot of them numbers are their friends! They are a wealth of knowledge that can help guide you, and let you know of things you may not have realised.
If you need some help with your finances, you can find some amazing ladies HERE
Written by: Kye Anderson