It is important in any aspect of your life that you are responsible for your finances; the same can be said if you are a business owner.
There are a lot of responsibilities to make note of as a director of a business; daily intake and outgoings, as well as wages of employees, taxes and several other important things. Budgeting and managing your finances are important components to any director and budding entrepreneur, whether you do them yourself or hire someone to assist with the process.
If you have found yourself in the position where you need to balance the books in your business, or are planning to open a business and need to understand the processes for managing your finances, you have come to the right place. We have created a helpful list of things to remember when needing to manage your finances as a business owner.
Tax obligations
Before you can do anything with your finances, you must be aware of the tax obligations that you must pay as a business owner, and the implications that you could face if you do not; you don’t want to end up in any trouble! There are several tax procedures that business owners and directors are obliged to follow, no matter what country they are operating in. A little-known fact to the masses, but when forming a business, the director must register the company for VAT and other related taxes; a process, simply known as VAT registration. This is one of the first things that must be completed when forming a company. While this can sometimes be a lengthy process – taking around one month to be fulfilled – companies are still free to trade and provide products and services during this period. Fear not though, there are helpful tools out there to assist with this.
Preparing for a rainy day
This is something that should be present and evident from the planning process of opening a business. Having a savings account or pot of money specifically in case you run into any problems in the future, is vitally important. Preparing for some tough times – when your incomings are short – will ensure that your business can go as far as it can, without having your livelihood cut short prematurely. Particularly if you have an office space or are renting a workspace, a savings pot will cover any repair work that you might potentially have to complete.
Hiring an accountant
As filing taxes can be a confusing process for some, there are businesses out there that provide guidance and assistance with tax filing and other processes. While you may well have the facilities to manage your finances at first, as your company grows, and your income and outgoings increase, it is advised to hire someone to assist with this job. Accountants are the main source of assistance when dealing with business finances, and are a popular choice for many business owners out there.
Accountants manage and maintain the books of a business so that directors and business owners don’t have to; one less thing to worry about! Whether you are looking for a Norwegian, British or Dutch accountant, each is clued up on the types of laws and legislation that must be stuck to in the respective countries. To find out more about tax obligations in different countries, and how accountants can help navigate this confusing world, check out this website for more.
While an accountant’s job is packed full of all thing’s taxes, they are also able to help with a range of other cash-related jobs that you need fulfilling in your business. As you grow and develop, an accountant is able to give estimation and project the cash flow that they think you will be experiencing in the future, a great way of preparing for any shortcomings. Furthermore, accountants are able to reduce your tax liabilities and enable you to make the most out of the money coming into your business; what more could you want?
Paying systems
Like any business, you must have a successful paying system available to ensure that you are paying yourself and employees accurately and on time; you don’t want disgruntled employees missing their well-earned wages! Paying systems need monitoring by another member of staff, so it is worth considering hiring someone to work in the HR, finance or related departments to keep track of wages and other expenses on a day-to-day basis.
Monitoring the wages ensures that your employees are paid fairly for the work that they are doing. Making certain that you have someone to take charge of wages is important, to ensure that the relevant taxes are being paid from your employees’ wages and being sent to the appropriate bodies.
Having books which keep track of ingoing and outgoings are also vitally important. This doesn’t necessarily mean you need physical books; there is computer software available now which is increasingly accurate and easy-to-use. Having a paying system available to keep track of your ingoing and outgoings allows you to determine any patterns which might be occurring, as well as any areas in which you might be overspending in. Being able to spot an increase in income, provides the opportunity to monetise on this information; if you own a company that sells hot drinks, and you see that you have an increase in traffic on a Wednesday money, you could look at creating some sort of deal for that time period, to increase the popularity of this time of week even more.
Bank accounts
If you are opening a small business, you do not want to just be relying on your personal bank accounts to managing your company finances on top of your own. Having a separate bank account specifically for your business, works in tandem with the previous point; keeping track of ingoing and outgoings. Being in possession of a business bank account with access to mobile banking, will make managing and maintaining the finances of your business a lot easier. It must be mentioned, that as a registered company, you are expected to open a business bank account.
When in the position of having to open a business bank account, you will need to do a bit of research, for each bank offers different benefits associated with business bank accounts. While there are benefits, you also need to be aware of the add-ons associated with business accounts: withdrawal and transaction fees as well as admin features and any introductory offers. As mentioned previously, an accountant would be able to advise on which account is best to select when wanting to get the best deal for your business.
Re-evaluate often
Another point for managing your finances is that is important in any aspect of life, ensuring that you re-evaluate your work often is key. Re-evaluating makes certain that you are entirely aware of what is going on in your business, and any issues that you might be facing. Going through a process of re-evaluating measures in your business, provides the opportunity to ‘square things off’, and get everything to the best possible state that it can be. This doesn’t have to be an entirely negative process; getting employees involved allows ideas and suggestions to be shared which will benefit the masses, and ultimately the ways that your business fulfils work. A great way for you to connect as a team, with your business at the heart of everything.