According to reports, over 2.4 small business enterprises in Australia generate more than 700 billion of the economy’s revenue. One of the main problems of these small businesses is staying afloat after five to six years. For this, small business owners must learn how to manage finances and maintain cash flow to keep their business growing and ensure profits. It is also important to manage your finances to get loan approvals and valuable tax deductions and make better decisions for your business. If you are also a small business owner and need help managing your finances, here are some tips to help you:
Your first step should be to create a business plan for your finances that includes budgeting, tax planning, accounting, plans and risk mitigation. Financial projecting is important in creating a business plan as it helps you review your financial statements and decide how and where to invest your money. For instance, if your business earns high profits, you can invest this money to hire more staff and buy inventory.
If you use your personal credit card to cover your finances and deposit your business profits into your account, you might miss out on tax deductions.
It is important to pay yourself a salary and other employees so that you can save and cover your personal expenses. If your business doesn’t work out in the long run, this will be a good lifesaver. You can always talk to a business consultant in Australia who will help you decide how to pay yourself and how much.
Maintaining a good business credit score is important as it can impact your business insurance rate, getting loans from banks, and contracts from clients. To build your credit score, you must make sure you pay all your dues on time and register all your business payments to keep a record of everything.
You should consider getting a corporate credit card to manage your finances, as these cards provide short-term credit with zero interest and thus increase your purchasing power. This card also has a higher credit limit that allows you to make bigger purchases for the business that will not affect your personal liability.
You must manage your business finances by paying your taxes on time. What kind of tax rate you pay and how you pay these depends on your business model. You should keep aside a part of your business income each month to pay all your taxes on time and avail returns and deductions. Here are some important tax dates in Australia for small businesses:
One of the best ways to cover your business expenses is by taking a small business loan to help you pay for salaries, buy inventories and cover utility bills. Small business loans involve less documentation and are hassle-free as they require easy eligibility. The best part is that you get good interest rates and do not have to pay any collateral for these loans, so you are not stuck in a circle of debt.
Lastly, you should hire a risk management team to manage your finances and mitigate business risks. This team will work with you to identify financial and operational risks and develop effective strategies to prevent losses. This will help you keep track of your finances and plan for the future of your business.
Following the above tips is important to manage your finances to stay afloat in the competitive business market. You should also regularly monitor your financial plans and budget reports to see how much profit and loss you incur and find the problem areas. This will allow you to decide whether to keep investing in the business or save for future growth.