We can’t stress enough how important it is to have a separate bank account for your business. It simplifies so many things when it comes to your records and will save you hours of time in the long run.
This means that you only put business income and expenses through the business account and you take a lump sum payment, much like a salary every month into a personal account, which you pay your personal expenses out of.
There are many banks out there offering various lengths of free business banking before they start to charge you. We’d recommend that you look past the free period and consider what the charges are when you do eventually have to start paying.
It’s also worth looking into the quality of the online and mobile banking they offer as well, you will want easy access to payment services and account information, remember time is money!
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It’s worth setting as many payments up on a standing order or direct debit as you can, if you’re ill and can’t work in your business then at least suppliers and staff will get paid. I’d also recommend getting your customers to do the same when they’re paying you.
If you’re not sure about how much money you can withdraw from your business for your own personal income, then we can provide you with a free tax projection to show you how much cash you’d have left over after covering your tax bills. Please take us up on this offer as it may save you from developing cashflow issues.
We use a piece of software in the firm called FUTRLI, this is capable of providing 3-year cashflow forecasts and we can work with you to keep these up to date. We usually do this via monthly meetings on Skype, where we model upcoming expenses and revenue and help you understand the opportunities and risks.
Seeing the long term financial impact of the decisions you’re planning to make and also identify gaps in your cashflow months in advance can really protect the health of your business. Our software driven service has made cashflow planning far more affordable than it’s ever been for small businesses.
It can seem in certain industries that it’s normal to give your suppliers credit when it comes to payment, but this can cause a risk if they go bust and can’t pay you, plus you’ll have to find the cash to cover your expenses in the meantime and waste your time chasing them up.
The most successful businesses I work with actually ask for some if not all of the payment up front, even if this means offering their customers a bit of a discount to achieve it. Better still, find a way to turn your business into a monthly subscription service.
Remember failing in business is the norm, you have to do something different to succeed!