- Putting money aside
Whilst the whole point of starting a business is investment – putting in money so you can get a lot more in return – saving for a rainy day will always be a good idea. There will always be expenses that you haven’t counted on, and there will always be nasty surprises just when things are looking like they couldn’t be better. Put a little money aside (at least three months’ salary) just to be sure that when things start to go downhill, you have time to right the wrongs and come up with contingency plans. Starting a business is a risky venture, and having a little security blanket goes a long way. Like you and all of us, your business will have its ups and downs. Be prepared and be sure you have something stowed away when the need arises.
- Complying with the government
When it comes to business, many see the government as a big brother whose only goal is to slice away their income by claiming taxes. However, this should be seen merely as a cost of doing business – what you get in return (roads to transport your goods on, a legal system that can help you claim debts and licences to do what others can’t, just to name a few) is staggering as well. Comply with the government and make sure you file your tax returns correctly and on time.
Besides, truth be told, the government doesn’t really get that much in taxes – just ask any good accountant and they’ll tell you there are plenty of ways to save money on your taxes. The government doesn’t just claim taxes – they do give a lot of breaks, as well!
- Defining, classifying, and creating insight
Your accountant will know exactly what you’re talking about when you mention this to them – it’s the accountant’s business, after all, to know exactly how the cash flow of your business works. First you have to define – what are transportation expenses? What are maintenance expenses? What is included in salaries and wages, and what should you do with expired raw materials? Where does a change of oil fit in? Under which heading do you file an employee’s bonus, and how do you classify licences? Are they assets or merely a cost and liability?
By placing every expense and income in the correct category, you create insight into the cash flow – to a point where after a while you can more or less predict what the cash flow of next month or even a year down the line will be. This gives you a great advantage: it allows you to adjust your plans according to the projected income and predicted expenses. Keep accurate records, and make sure they are in perfect order.
Keeping accurate records and avoiding mistakes is easy – but it requires some know-how. If you would like expert help with your accounting and other business decisions, you can depend on reputed and respected accountancy firms like www.gsmaccountants.co.uk.
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