One of the main areas that you will need to think about when running a company or working as a contractor is your business finances. This vital area is not only needed for the legal tax returns to HMRC but will also be vital in helping you see how your business is performing. If you are looking for some great tips on handling them in the best way, then read on.
The best ways to handle your business finances
There is no doubt that looking after your businesses finances is both different from your personal finances and also crucial. Doing it properly will not only mean that all your records are in order but also that key tasks such as payroll are done on time and you know how your business is doing.
Here are some great ways to look after your business finances:
- Get educated – the first thing that you will need to do if you are looking after your business records is educate yourself about what is involved. You cannot do them if you don’t know what is involved or how to read a financial statement. Get up to speed with the basics and any deadlines that you need to know about for financial returns to HMRC.
- Use a separate business account – whether you are working as a contractor or in charge of a limited company, you need to have a separate business bank account. This will make it much easier to track expenses and payments, rather than having to untangle it all from one account.
- Make sure that you keep all the paperwork you need – when it comes to things such as business expenses, you need to keep all the relevant receipts or paperwork you need to claim them. It really is best to keep this in order as you go along rather than having to spend days trying to find it all. Set up a simple filing system to keep all your paperwork in order and use it.
- Look at your variable costs – when it comes to your business finances, you will have fixed and variable costs. While you can’t do anything about fixed costs, you should do what you can to cut variable costs. There will always be some needed to offer the best service, but try to keep them as low as you can.
- Outsource your accounts and payroll – outsourcing is a great tool for all businesses but especially SMEs or individual contractors. One area that this is very handy in is handling your businesses finances and accounts. If you find that you simply don’t have the time or inclination to look after them, then why not use an online accountancy firm to help out? These will often be cheaper than traditional accountants but provide the same expert help. Finding a good online contractor accountant is not hard these days and will certainly free you up to focus on work.
Business finances are essential
As a self-employed contractor or sole trader of your own business, you will know how vital it is to keep on top of your work finances. While this can sometimes seem challenging, hopefully the above tips will help make it all smoother and less stressful.