Financial services, provided by Johannesburg-based The Tax Shop franchisees, are comprehensive, customised to meet client requirements and affordable. However, even if you don’t want to make use of such services, you will benefit from a few tips on the financial management of your new business as shared below.
Do Business within Your Budget
It is essential to work with a budget, but you need to be realistic. The budget isn’t just a reporting tool; it is a business plan regarding the financial direction of your company. An accurate budget gives you guidance regarding financial decisions and shows you where you can expect income from and whether such income will be adequate enough to meet your financial obligations and to grow your business during the next 12 months. Using the budget you can make decisions regarding marketing and business growth realistically, based on projected income.
Separate Business and Personal Expenses
Many a small business owner falls into the trap of buying new vehicles and computer equipment or going on holidays once their businesses are doing well. It is essential to curb any personal spending for the first few years of operation. Any such spending on personal or even business expenses without consideration for unforeseen changes in the business environment can leave you with cash flow problems. With it being law that once your liabilities exceed the assets to declare the business insolvent, you always need to ensure that capital layouts and unnecessary spending are kept to a minimum and only buy that which is really necessary.
The best way to ensure tight financial control is to allocate a set salary to you. If your business did really good during the financial year, pay out dividends and use part of the profits to invest in further business expansion. Separate your personal and business bank accounts, as this will help you not to use the business income for personal costs and also make it easier to calculate taxes due.
Keep Meticulous Record
This is one area where small business owners often fail. Keeping records help to support business decision-making. Keep the invoices and statements well organised and, though electronic record keeping is definitely the way forward, make provision for computer failure. Do this by backing up information to the Cloud and by printing out records. Invest in a proper accounting software and payroll management solution. Of course, when you make use of our financial services you will already have backups, and you won’t need to invest in expensive software and will benefit from meticulous record keeping.
Don’t just manage the debt owed by clients, but also manage your accounts payable to creditors. Follow up immediately on overdue accounts and make sure you don’t fall behind on payments to creditors.
Streamline Functions and Stay Clear from Overspending
It is easy to spend too much on branding and extravagance. It is your responsibility to streamline all office functions and to minimise capital expenditure. Consider leasing equipment that quickly depreciates in value, such as multifunctional printers rather than buying the equipment. Don’t buy more property than you need and this extends to vehicles for the business. You don’t really need to have the top of the range computers and most certainly don’t have to create the most extravagant reception or have loads of entertainment. Keep costs low, functions smooth and operations focussed.
Slow and Steady Growth for Long-Term Success
Managing a small business is different from managing a medium-sized business. Though you may be tempted to expand operations as quickly as possible, there are costs associated with expansion, including additional floor space, more personnel, higher taxes and more compliance. Where possible, outsource functions. Instead of hiring a bookkeeper, outsource the accounting function. You can streamline this process even further by outsourcing tax calculations, payroll management and any office functions that eat into your profits by making use of our affordable and extensive range of financial services in Johannesburg.
Making use of professional accountants and tax consultants for financial services as available from The Tax Shop in Johannesburg will certainly benefit you in terms of cost savings, accuracy, reduction in manpower needed to handle accounting, financial reporting and payroll management, as well as ensure full compliance with tax requirements.