Tips on managing your small business finances
Tuesday, 29 March 2016 11:46
Do you run your own business? As of June 2015, there were more than 2.1 million active businesses in Australia, from sole traders to large corporations1. But over the preceding year, Australian businesses had an exit rate of 12.4 per cent.
Handling your money efficiently can be crucial, especially in the crowded Small to Medium enterprise (SME) market. But how do you make sure you effectively manage your small business finances?
How do you make that small business grow?
Keep the books in order
The Australian Taxation Office requires that you keep your business records in order, easily accessible and legible, for at least five years2. But exactly what paperwork are you supposed to have?
- Profit and loss statements as well as balance sheets
- Statements from your business accounts and credit cards
- Payments to employees and any PAYG tax
- Invoices and receipts for goods and services, both bought and sold
- Register of assets and stocktake details
You may also like to consider collating your business cash flow with a profit and loss forecast for your financial year. There could be plenty of paperwork, but staying on top of it may help you efficiently do your taxes, see exactly how well the business is doing and could assist in providing insight for your next big business decision.
Work out your limits
Similarly as you would when buying a house with a home loan, Australian SME owners may need to consider their financing limits. Taking out a business loan for a new site expansion or company growth may help with your future plans to expand your small business.
Will you be able to stay afloat?
Try to consider all of the variables. What kind of assets do you have as security for a business loan, and how much are they worth? What repayments can you feasibly afford over the set term? What's your loan value ratio, and how big a deposit will you need?
By taking out business financing with your bank, will you be able to stay afloat? And will you take the money as you need it, or take a full payment off the bat?
These are some questions we may be able to help you with. At IMB, we have a wide range of business finance products and services that cater to businesses both small and large. Our personalised service means we can help you find a financial solution that may fit your business needs.
This article has been prepared by IMB Bank for general information and reference and it is not intended to be advice. It does not take into account your objectives, financial situation or needs. You should seek your own legal, accounting, financial or other professional advice when appropriate, and consider the relevant Terms and Conditions or Product Disclosure Statement before deciding whether to acquire any products or services offered by IMB Bank. We do not recommend any third party products or services referred to in this article and we are not liable in relation to them. Any links to third party websites are for your information and we do not endorse any content on those sites.