One of the most important aspects of running a business is ensuring that the business finances are stable. Whether you are just starting your business, or have been operating for a while, Business Kitz has provided a guide to ensure that you are managing your finances correctly and efficiently.
Keep your personal and business finances separate
A separate business bank account is required for businesses that operate as partnerships, companies or trusts. However, even if you’re operating as a sole trader, a separate business bank account allows you to track your business’ income and expenses much more easily. Additionally, having a separate bank account for your business will give you a separate credit history for the business, and in most cases, this will lead to better borrowing power if your business needs a loan later on.
Invest in your accounting platform
In our modern times, there are a variety of accounting and bookkeeping systems that may suit your business and it’s important that you choose a system which will maximise your business’ efficiency whilst keeping costs low. Popular accounting softwares include MYOB, Xero and QuickBooks; all of which will help you track your business’ financials, including bank feeds, payroll and invoicing. If you have engaged a financial professional, we recommend you speak to them about what product would best work with their system.
Keep accurate records of business finances
Whilst not the most exciting part of owning a business, keeping accurate and up-to-date records is a critical factor in the success of any business. Keeping accurate records, which can be done by using the platforms suggested above, can assist your business to:
- Keep track of the business’ health;
- Meet tax and superannuation obligations;
- Manage cash flow; and
- Demonstrate your business’ financial position to lenders or investors.
Understand your obligations and responsibilities
As a business owner, you will have various obligations and responsibilities to a wide range of people and government bodies. Whilst these obligations can often seem difficult to juggle, it is critical that you ensure you are aware of your obligations to the Australian Tax Office (“ATO“). At the end of the financial year (“EOFY“) businesses are required to prepare and submit reports to the ATO which may include some or all of the following:
- Income tax return;
- PAYG withholding annual report;
- Fringe benefits tax return;
- GST annual return;
- Taxable payments annual report;
- Third party reporting; and
- Q4 BAS.
One of the most effective steps you can take to grow your business is to plan ahead and develop a clear strategy for your business finances to follow in the following year. Whilst flexibility is important as circumstances may change, planning ahead is the best way to cement your business’ financial future. This can include activities such as:
- Evaluating current strategies to determine strengths and weaknesses;
- Assessing the market your business operates in (has there been any major economic or social changes that may impact your business model?);
- Undertaking a financial health check to ensure your business is viable; and
- Updating business and marketing plans to reflect changes.
If you require legal advice or have any questions regarding your business finances as an Australian business owner, please do not hesitate to contact our sister company, Legal Kitz by phone on 1300 988 954 or by email to email@example.com.