Any business owner will tell you how integral having the right set up for your business finances is, it is important to have the right accounts open and advice in place before you start trading. After your business has launched you will need to make sure that you are in a stable financial position at all times and to do this you need a business account.
The first and most important thing to remember is that you need to keep your business and personal finances completely separate. It may sound obvious, but however small your business is, it needs to have its own financial set up to protect your personal finances and for legal reasons such as tax. Having a specific business account gives you a clear trail of moneys going in and coming out, making auditing and non-essential cash flow management easier. It will also be a lot easier to calculate how much money you have to save towards your tax by using a specifically designed account.
Having a separate business account is all about keeping your financial affairs as organised as possible. Although it is not what you want to be considering, if your business were to get into financial trouble you need to have clear and up to date accounts in order to deal with the financial crisis. There are various services that a business account can offer you that your personal one does not, especially when it comes to defaulted payments or any other financial turmoil. From overdraft facilities to preferential loan rates, both of which can become essential to start ups struggling with the first few months of trading. Being organised will also be of use to your business accountant and make their job smoother, meaning that you will have less financial stress to worry about.
Choosing the right account may seem like such a small factor, in the grand scheme of creating a new business. However, much like the other small business decisions you will be making, they all work together to create a well-run machine. When trying to decide upon bank accounts the most important thing to do, is to not go in blindly. Do your homework first, looking at what your business will specifically need, how the account needs to work for you and what extra services you will need. This could be anything from credit cards through to the contact details for bank managers or accountants. If you think you will need it, then the likelihood is that you will, so make sure you have all the knowledge from the get go.
Along with acquiring the right account, you will also need a clear business plan. Now, many people may question why this is necessary, but you may need to have a concise plan in place to open an account in the first place. There are many resources available to you, if this is something that you are struggling with, especially as it is so important to providing the predictions of future growth. Your business plan needs to include cash flow projections, budget breakdowns and any loss you think you may make. It needs to be well researched and well written in order to secure the future funding of your business.
If you can get each of these pieces in place before you start your business, then you can be sure that you are on the right step from day one.
Photo Credit: Wikimedia/Albertyanks Albert Jankowski