While the freedom of running your own business can obviously be attractive, you could feel rather daunted by the prospect of managing the financial side of the company. If you used to work as a standard employee, you are probably accustomed to not fretting about financial figures.
However, making the transition to financially efficient management does not have to be as arduous as you might currently expect. It’s about utilising appropriate skills and tools in the right way.
Regularly updating your financial records
This task is crucial for ensuring you have the right information at hand when you need to send invoices or have your tax obligations calculated. Initially, you might see nothing wrong with simply completing financial tasks when they seem necessary – like making a note of transactions once they have been made or submitting invoices when you notice the need to do so.
However, with this approach, there can be too much room for error. Should a certain responsibility slip your mind, you might either fumble to catch up at an inopportune moment or end up with skewed figures that don’t paint an entirely faithful picture of your company’s financial performance.
Hence, Business.com advises that you set aside a time slot – whether that be for every day, week, month or whatever else works for you – in which you look at everything financial that needs to be recorded. With this approach, you are less likely to experience bewilderment.
Using accounting software
You might have assumed that you shouldn’t use this software unless you are a qualified accountant. However, accounting software is not only available to you but also easier to get to grips with than you might have anticipated. You don’t need to keep putting rudimentary spreadsheet software like Excel to accountancy purposes, as specialist software will better support accountancy processes.
With accountancy software like QuickBooks or Xero, it is easier for you to schedule, track capital gains, and keep your incomings data and outgoings data separate for more ready comprehension.
Also, you shouldn’t pass up the opportunity to store your financial data in the cloud. “Cloud accounting gives small business owners the ability to dig into their finances whenever it’s convenient, as well as have their accountant chime in from the comfort of their home or office,” Business News Daily has quoted former Xero president Jamie Sutherland saying.
Implementing the right insurance
When you own a business, there are various types of insurance that could be applicable. Don’t be put off by such terms as “employers’ liability insurance” and “fleet insurance”; you need to spend time educating yourself about different forms of insurance and whether any of them would be legally necessary for your company.
You are especially likely to need employers’ liability insurance. This is intended to help fund compensation payouts if employees are blighted by sickness or injury due to your corporate activity. The few UK firms exempt from the necessity of this insurance include companies without employees.
Also worth considering is fleet insurance, where multiple vehicles used for commercial purposes can all be covered by one policy, and public liability insurance for looking after customer welfare. You can source all three types of insurance from the broker Be Wiser Business Insurance. The company is privately owned, allowing it to give advice that is both impartial and high quality.
Carrying out a financial check-up every quarter
As a business owner, there is never a time when it is okay for you not to be highly aware about the company’s financial condition. Nonetheless, this does not take away the need for you to, on a quarterly basis, conduct a complete analysis to discern where tweaks should be made, as recommended on Business 2 Community.
You should start carrying out these check-ups once you have picked up the other habits recommended in this article. Otherwise, you might have the feeling of attempting to walk before you can run.