Being an entrepreneur, you’re most likely be more concerned about starting and running your business, forgetting the most important aspect — financial control. Fine, your business might be enjoying a lot of patronage, and you don’t see a reason to put those finances in order, but this is key. Poor management of financial activities have the linked to be the most common cause of business failure.
Managing your business finances may appear to be, challenging, and often is, but it is extremely important. It helps you to project where your business is headed, and when you know exactly how your revenue and expenses are stacking up, you can begin to make more informed decisions for your business.
You sure don’t want to end up being a failure at business. So, it’s time to get those finances in order.
Here are tips to make it work:
Keep your personal and business finances separate
This should be first on your to-do-list when it comes to putting your finances in order. That new bicycles for your kids isn’t a business expense, but your business debit card was handy so you used it. Sure, you can pay back your business for a personal expenditure, but mixing your personal and business finances will inevitably result in confusion.
If you’re going to do it right you actually have to record an accounting transaction. Things get complicated fast, and you don’t need that headache. To be successful in business, you need to be able to monitor and track your key performance indicators. You need to know some of the most important elements such as cash flow, expenses, revenue, profit and so on.
Know your tax responsibilities
Depending on the type of business you’re running, your tax responsibilities will vary. There are several types of tax payments for businesses in Nigeria. Get to know about them, so you won’t be defaulting and be asked to pay during the pressing time for your company.
There’s PAYE for employees, and many others. Being unaware of these responsibilities can be costly, and you can be prone to penalties, interest and fees. Ensure you consult with the FIRS, the body in charge of revenue and tax-collection in Nigeria. It’s also a good idea to consult with an accountant.
Clients come and go, projects ramp up and shut down. You, on the other hand, still have to feed and meet up with your expenses. This means you need to plan ahead. Begin by monitoring your finances and projecting future revenue and expenses, as it will enable you to make better long-term decisions for your business.
If you aren’t looking at the future of your business, you could be taken by surprise. But by making future plans, you’ll be able to mitigate unwanted surprises. Even if unexpected expenses do rise, if you’ve been practicing conservatism in your spending, you shouldn’t run into any major problems.
Budget and Track Expenses
Part of staying organized and planning ahead should include creating a budget, as playing fast and loose with the check-book can get you in trouble in a few ways. First, it can mess with your cash flow, which is the reason many businesses fail. Also, when you lose track of what you’re spending, you could be missing out on valuable deductions for your business.
The importance of a budget could be equated with the value of a well-formed business plan. Make a budget and use it as your guide. It’s a framework that you can use to help you make clear-headed decisions, whether it’s increasing your marketing spend, or cutting expansion costs to keep your profits on track.
Hire an Accountant
Since the days of the abacus, accountants have been trusted and respected allies to small business owners everywhere. Their intimate knowledge of the profession as well as tax laws in their jurisdiction will save you money almost every time. It might be tempting to want to save money and do it yourself, but it’s almost never more cost-efficient in the end.
An accountant will almost always find more deductions and keep you penalty-free. On that note, the cleaner your records, the fewer billable hours you’ll have to pay, so make sure you’re organized year-round. But when things get technical, save yourself the money, time and headaches and call in a trusted professional.
Did you find these tips helpful? Let us know in the comments!