Managing Your Business Finances While Running Your Business

Running a business is no walk in the park. Between managing cashflow, juggling business bank accounts, handling tax, and keeping track of expenses, it’s a full-time job just to stay on top of your finances. We’re here to break it all down and give you practical tips and to dos on what you need to know to keep your business financially healthy. Cashflow: The Lifeblood of Your Business First things first, cashflow. Think of it as the lifeblood of your business. Without it, you’re stuck. Managing cashflow means keeping a close eye on the money coming in and going out. It’s not just about making sales; it’s about timing. Ensure you have enough cash on hand to cover expenses, especially those unexpected ones that pop up at the worst times. Top Tip: Use cashflow forecasting tools to predict your financial position and avoid nasty surprises. These tools can help you plan for peaks and troughs, ensuring you always have enough cash to keep the wheels turning. Business Bank Accounts: Keep It Separate Next up, business bank accounts. If you’re still mixing your personal and business finances, stop right there. Separate bank accounts aren’t just a good idea; they’re essential. They make tracking business income and expenses easier, simplify tax preparation, and provide a clear picture of your financial health. Top Tip: Shop around for the best business bank account. Look for one that offers low fees, good interest rates on deposits, and easy integration with your accounting software. Savings Accounts: Building a Safety Net While we’re talking accounts, don’t forget about a business savings account. It’s not just for show – it’s your financial safety net. Building up a reserve can help you weather tough times, fund unexpected expenses, or take advantage of growth opportunities without needing to scramble for a loan. Top Tip: Aim to save at least 10% of your profits each month. Treat your savings like any other regular expense – it’s non-negotiable. Tax: The Necessary Evil Let’s face it – no one likes dealing with tax, but it’s a necessary part of running a business. Staying on top of your tax obligations is crucial to avoid fines and keep your business running smoothly. This includes VAT, corporation tax, and any other relevant taxes. Top Tip: Use accounting software that automatically calculates tax liabilities and sets reminders for important deadlines. Consider working with an accountant to ensure everything is above board and you’re not paying more tax than you need to. Expenses: Track Every Penny Keeping track of your expenses might seem tedious, but it’s vital. Every penny you spend should be accounted for, from office supplies to travel costs. Not only does this help with budgeting and forecasting, but it also ensures you claim all possible deductions come tax time. Top Tip: Use expense tracking apps to capture receipts on the go and sync them with your accounting software. This way, nothing slips through the cracks. The Juggle is Real Running a business means constantly juggling multiple financial responsibilities. But with the right tools and a bit of discipline, you can manage your finances effectively and keep your business on a solid footing. Remember: - Monitor cashflow regularly and forecast to stay ahead. - Separate your finances with dedicated business bank accounts. - Build a savings buffer for those rainy days. - Stay on top of taxes to avoid nasty surprises. -Track expenses diligently to maximise deductions. By mastering these elements, you'll be better equipped to navigate the financial challenges of running a business and focus on what you do best – growing your company. Now, go forth and conquer your business finances like the pro you are! Bonus Tip: Link your business bank accounts up with Money Squirrel, and let us do the hard work of splitting your incoming payments aside automatically. Those savings then turn into a passive income, earnings interest while waiting for the big (inevitable) HMRC bills.