Real Entrepreneur Mums RealMag Jan29 2018 | Page 11

Step 1 – Know Your Expenses I’m not talking about being a full bottle on Australia’s taxation laws – that’s what accountants are for. I’m talking about making sure that you know what expenses are actually business related and which ones are personal. Here’s an exercise for you. Think about how much money you’ve taken from the business in the last 3-months. No need to think about it long and hard, just a ballpark figure, based on your knowledge of your expenses. Now write that number down somewhere and keep it safe. Then, print or download the last three months of bank statements for your business accounts. Highlight all your personal expenses and add them up. Compare it to the number you wrote down. How did you go? Did you overestimate or underestimate? Are you freaking out about now? Don’t be. There’s nothing that can’t be fixed! Your aim is to be financially aware so there are no surprise tax bills come end of financial year. Step 2 – Know What You Need to Live Going into business for yourself is great, but you need to know how much money you should be making to be profitable. Because a business without profit, really is just a hobby. And that’s fine if that’s all you want your business to be. But if you’re solely responsible for the finances in your household, or you’ve established your business to pay the mortgage or save for school fees, you need to know how much you need to bill each month, to be able to draw a wage from the business. That’s right, you are going to pay yourself a salary. This is the money you will use to meet your financial goals and/or pay those personal expenses. Either way, it’s a clear transaction that each month, you have withdrawn XX amount from the business for your personal use. Step 3 – Divide and Conquer Now, go and get yourself a no account-fee business banking account and start using it…but only for your business transactions. It’s not for your morning coffee, or the shoes you have to have for that client meeting. It’s a transactional account for which people pay money to you for services rendered and you pay people for things related to your business. When you have a separate business account (with its own access card), you are less likely to use the business account for personal expenses – especially if you are drawing a wage each month. The other advantage of separate business and personal accounts is, that if you do end up handing over your accounts to bookkeeper or accountant, they spend less time trying to reconcile your accounts, saving you money in the long run. These three simple steps will quickly give you a snapshot of how your business is running and if you can afford, or you actually need, a bookkeeper to keep you accountable. Working for yourself is both rewarding and challenging. At the end of the day, or week or month, you want the rewards to outweigh the challenges. And one of the simplest ways to do this is to have a clear plan on how you will manage your business finances. Get them right from the start, or make the changes you need, but always remember business is business. Katie Marshall - Efficient Tradie - 0424 151 056 [email protected] EfficientTradie1 11