Is your business fighting fit?

The old adage of “looking after the pennies and the pounds will take care of themselves” certainly does ring true in business. It may seem miserly to count the pennies, but they all add up to pounds – and pounds certainly do make a difference to bank accounts. An unbelievable amount of money is lost every year by small businesses, simply because their finances are not fighting fit.

Taking an active interest in the financial side of your business is a dual responsibility which should be shared between you and your accountant. Having a good accountant is an essential ingredient in running a successful business. Likewise it is important for business owners to be financially astute. Simply liaising with your accountant once a year is unlikely to result in a successful business.

Below, are some useful tips that can help to make your business fighting fit.

Are you aware of what allowances can or cannot be claimed?

Her Majesty’s Revenue and Customs (HMRC) produces lots of information on what expenses are allowable. Needless to say the information produced is often long-winded. It would be advisable to either do some research or to seek some professional advice.

Meeting deadlines enables you to avoid tax related penalties.

Procrastination often results in the late filing of annual tax returns. The knock-on effect is often a penalty fine from HMRC. Paying unnecessary fines is akin to burning money. Logically you would never set fire to £100 – so why pay fines that are avoidable. The objective of running a business is to create wealth, not to give it away.

Be clear about your terms of business.

Do not be shy about asking your clients for payment. It would be prudent to state when payment is required. The best possible outcome for a small business is to be paid in advance before work commences. If you do offer credit terms, you should make it clear what these are.

“Dig the well before you are thirsty”.

In an ideal business world you should have a constant pipeline of prospects waiting for your services or products. However we know this is not always possible. Erratic or confusing advertising is often expensive ad non-productive. It may also damage your brand. Careful consideration needs to be given to where you are going to advertise, who your target audience is and the frequency which you are going to advertise.

Why bother to implement tax planning in your business?

Would it be better to leave money in your company this year and take a lower salary? Managing your own accounts may save a little but you may also miss valuable tax saving ideas. Tax planning strategies equates to being wise about how your taxes are arranged – not simply just trying to avoid tax obligations.

Separate bank accounts

Where possible you should always opt for FREE business banking. Additionally you should not leave excess funds in your business bank account. Move any excess funds into to a high interest saving account. There are still a few savings accounts that offer a good interest rate.

Your finances will not get themselves into shape – a regular workout for them will do wonders for them!