words by Aimee Russo, Business Lane @businesslaneau
Like a super fun new year in January, July bring the start of a new financial year and the opportunity to make money goals and set yourself up for financial success in the financial year to come. Before you cringe at the thought of looking at your finances, this doesn’t need to be overwhelming or stressful. In fact, this can be quite fun and liberating. You can spring clean the way you manage your receipts and records, you can detox your spending habits, and plan out really great financial goals (hello, overseas holiday, new wardrobe, renovations, or even smashing down some of your home loan). There’s plenty of upsides to having a handle on your hard-earned cash. Following are some simple, but smart ways to get your finances in better shape for the shiny new year ahead. A top tip: you can apply these actions to your personal finances too – having a handle of all of your money is really quite enjoyable once you make it an easy part of your life.
Get a dedicated bank account for your business.
If you do just one thing being suggested here, make it this one. Have a separate bank account for your business activity and your personal spendings. There are plenty of free bank accounts around, or if paying $5-$10 a month for an account seems steep, the trade off is the hours you are otherwise going to spend sorting through millions of Coles expenses trying to pick out the business-related items. You might risk missing things and not claiming tax deductions for legit business expenses. And, the bank fees are tax deductible too. If you’re a sole trader, you don’t have to have a business account, you can use a personal account in your name, but just make sure it’s a separate one. It’s totally ok to transfer money in chunks back to your personal spendings account for use. Easy peasy!
Do a budget and a cash flow forecast.
If you’re picturing a spreadsheet big enough to use as wall paper, stop it. It’s not necessary and would look terrible. Start out really simply. Record what you think your monthly sales will be. Record what your monthly expenses will be. Include your software, materials, internet, phone, insurances, stationery, meeting expenses, advertising, etc. Put a formula at the bottom that takes your total income and minuses the total expenses. This will be your profit. If the number is negative, this will be your loss. Review your expenses and sales projections if necessary, or make plans to keep you a float while you grow your sales and start to make a profit. Be sure to come back to this and compare your actual numbers to your budget to see if you're on track. Pat yourself on the back for smashing your goals here!
Have a system in place for your records and finances.
Gone are the days of putting your receipts in a shoebox all year and handing them over to your accountant once a year. Our favourite accounting software is Xero as its super easy to use and integrates with so many other applications. There are a billion other options out there so take a look around and see what fits you best. If you don’t have a heap of transactions or need reporting functions, you might like to use a simple spreadsheet. Whatever you do, something is actually better than nothing, so test out a few and use something you are comfortable with. Make sure you also keep your receipts and bills. We save these into Xero which is awesome, but you can use anything you find easy. Think Google Drive, OneDrive, Hubdoc, etc.
Allocate time each week to do your book work.
The longer you put things off, the harder they become. If you allocate an hour out of your schedule each week for filing your documents, recording your incomings and outgoings, checking your bank accounts, and chasing up any overdue accounts, you'll find the task a lot less overwhelming (and a lot less boring). You'll also find it easier to remember financial activity. Receipts fade and the chances of remembering what a purchase was for in a year's time are pretty slim!
Make it easy for people to pay you.
Save yourself the hassle of chasing up people owe you money by giving them easy options to pay. Stripe is great, it has low fees and they can be passed on to your customers if you like. There's also options like PayPal, eWAY, Integrapay, and loads more. They all allow your customers to pay by a payment method that suits them best and that helps your cashflow… and better cashflow means more money for shoes/wine/coffees/*insert your fav things to buy here.*
Keep important financial dates in your calendar.
Staying on top of your bills and tax obligations is pretty important. Make sure you know when your bills are due so you can pay them on time. Keep up to date with ATO due dates so you file your tax returns in time, and if you're registered for GST, make sure you lodge and pay your BAS on time. You can find a lot of the dates you’ll need on the ATO website. It's all about keeping on top of deadlines. And we all love a good deadline, right? If you’re unable to pay your bills or taxes, you can make arrangements in advance and save yourself a tonne of stress. No one likes getting overdue notices. Yuck.
Ask for help.
I see so many people who bury their head in the sand about their finances, hoping if they close their eyes long enough it will all sort itself out magically. Plenty of clients also come to me feeling embarrassed about not knowing where their finances are at and they've put off asking for help because they feel silly. Within a short amount of time, their minds are at ease and they've happily realised that just as no one expects us to understand how to service our cars, you're not born knowing everything about finance either, and that's ok! Find a professional you're comfortable talking to and get some help with your systems, your accounting software, your bookkeeping, your cash, your taxes, etc. You'll sleep better at night. I promise.
about Business Lane
At Business Lane, we believe life and work should be simple. We know it can be hard work being a business owner, but it doesn’t need to be complicated. We love simplicity and are passionate about helping you as a business owner and employer to understand and meet your obligations, to streamline your processes, and to take on the tasks in your business that will enable you to dedicate more time to doing your thing while we do ours. Our focus is on you and your desired outcomes and goals. We are here to enable you to concentrate on what you’re best at.