Managing the Finances of Your Business: 4 Financial Mistakes to Avoid

One of the major challenges in running a business is handling your finances properly. You need to make sure that your expenses and revenues are balanced to acquire the desired profit. You also have to gather sufficient funds not only for your operation but also for your planned growth. Doing these tasks can be overwhelming, and you can easily make mistakes if you are out of focus. To help you steer clear of failure and ensure success, here are some of the common financial blunders you need to avoid:

1. Borrowing Unneeded Money

There are times when banks and other financial institutions make offers to lend money to businesses. Many owners are enticed to take advantage of these kinds of proposals even if they do not need money. Thus, they carry the burden of paying for the interests that they shouldn’t be doing in the first place.

You should remember that banks make profits from the interests they collect from borrowers. Not that they are taking advantage of people, but it is just the nature of their business. Of course, there will be instances that you will need to borrow funds from financial institutions. However, you should do it at the right time through a correct process.

2. Spending in Advance Based on Forecasted Revenue

Finalising contracts or deals creates promises for revenue. Many business owners already count these transactions as collectibles. They start to allocate money on different projects assuming they will receive the revenue in the future. But when the contracts and deals collapse, they are left with a shortage of funds resulting to bigger financial problems.

The solution to this is simple. Do not count your revenue until the money is in your hand. Wait until your products and services are delivered, and you have received the payments before allocating the money for your expenses.

  • Quay Accountants - these are professionals who can give you an insight on the overall health of your company's finances and provide advice accordingly.
  • Breeze Associates - a firm of pro-active accountants in the Brighton area.
  • Mawson Breskal - specialises in tax planning, PAYE, VAT, tax returns and related accounting services for individuals and SMEs.
  • Plummer Parsons - a chartered accountancy firm that provides business services, wealth management, taxation, etc.

3. Expanding Without Sufficient Funding

Expanding your business can be done in many ways. You can open branches abroad or in another region, diversify your products and services, or target new markets. However, these big leaps require you to have sufficient funds in your bank to support the growth of your business. Still, many business owners make mistakes by implementing their expansion plans with proper financial back-ups resulting to failures.

Of course, this mistake can easily be avoided by preparing your finances before expanding your business. If you think that you have insufficient resources, you can opt for financing options offered by institutions or wait for another two or three years before implementing your plans.

4. Late Payroll Tax Payment

It is the responsibility of the business to remit the taxes of its employees to the government. Still, many employers lose track of this task and fail to pay income duties on time. This is caused by failure to immediately set-aside the needed money for the said purpose.

This can be avoided by creating a separate bank account for employee taxes to easily set-aside the remittance money. It is also ideal to take advantage of the payroll services offered by experts. It will not only help you ensure that the taxation process is carried out properly but will also allow you to save on staff cost.

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Managing the finances of your business can be an overwhelming task, especially if you have other important managerial tasks to do. To avoid putting your financial operation in danger, you should acquire the assistance of experts. You can get in touch with us here at ACB Office Services to find out how we can help you.