Estimated reading time: 2 mins
These days, it’s so easy for anyone at all to start their own business. All they need is a winning idea that the general public would love to see on the market. Then, after just a couple of hours working on either WordPress or SquareSpace, you can have your very own company website set up within minutes. And then you can start trading!
But before you do start making money, you need to completely understand how to manage that cash and use it to help your company grow. You need to have a grasp on the basics of business finances. Don’t worry; it isn’t quite as scary as it may at first sound! Read on, and we’ll explain business finance for all you newbie entrepreneurs!
Once you start to spend company money and make some profits, you need to keep a track of all the cash. You should be able to show what all of the money you spend has gone on, and where all of the cash that you make comes from. Jot down the date that each transaction took place. It’s also necessary to keep a track of any outstanding invoices. That way, you have a good idea of all the money that is owed to you.
Always Prepare For Tax
Even though accountants can get your tax return ready for you to look at in just a couple of weeks, you should always be preparing for this. That means you need to keep hold of all receipts and invoices that show evidence of your company’s expenses. If you forget some, it could lower your overall expenses for the year, and that would result in you receiving a higher tax bill. It’s also a good idea to keep all your books well organized so that your accountants don’t have to spend too long figuring out your tax. The longer they work, the more they will charge you!
Set Up A Payroll
As soon as you start to hire employees, you need to set up a payroll. This can help you stay on top of their tax, insurance payments, and any other amount that needs to come out of their salary. Most companies hire accounting firms to organize their whole payroll system for them as it can be very complicated to maintain. However, it’s not impossible to do yourself. If you want to try it yourself, you should consult an expert first for advice.
Create An Inventory
You need to have a record of all the equipment and tools that belong to your company. Keep this list of items in an inventory. It is also useful if anyone ever breaks into your office and steals any expensive equipment. The inventory needs to include the name, make, and model of all machines and equipment, as well as the date on which you bought it and the price you paid. Basically, try and include as much information as possible about each item in the inventory.
As you can see, business finance doesn’t have to be too complicated!