Finance is as crucial as the business itself. It is the means of providing funds for the company’s successful running and could be likened to a pole on which a business relies. Financing a business involves certain subjects that include:
Accounting is the process of recording all transactions about a business. Accounting helps you monitor monies paid and received; ensure statutory compliance, and make the right business decisions. This article will inform you of the basics of accounting and how you can take the advantage to build your business.
To utilise accounting as a tool of development, you should
- Review of Financial Activities Periodically
A review of financial activities informs most of your decisions and aid your planning. It helps you compare the previous year's output with the recent one and advise you on how to improve on the results. It requires the help of a financial analyst or accountant.
- Make a Check-list
A checklist contains your particular goals for a specific time for action. One of the significant features of a business checklist is reviewing your business registration documents. You should check your business registration documents such as licenses from time to time and make appropriate alterations where necessary.
- Keep A Detailed Record of All Transactions
It is essential in every business. Most transactions involve paper works and which are often required for reference purposes. Although it is necessary for some types of companies, it also ensures the company's smooth running.
- Review Business Ideas from Time to Time
One of the most interesting facts about businesses is its flexibility. It allows for expansion always. Hence to enhance growth, you must re-evaluate your business plan and make necessary modifications. Should also include your insurances.
- Seeking Professional Help
Accounting involves expertise. Hence, you require the skills of financial analysts and accountants for financial advice and support.
- Providing Strong Security for Your Files
All businesses must ensure the security backing up their files and correspondences is strong and cannot be penetrated by outsiders.
Accounting can be sub-divided into categories in which one can specialise in. Accounting experts include:
The accountant prepares all documents relating to financial issues such as tax compliance, Account statements etc.
The Auditor helps you to ensure your financial statements are precise and accurate. It runs an analysis of the company's revenue and expenditure.
As the name implies, a bookkeeper ensures adequate documentation of a company's daily financial activities.
How to Contact A Specialist?
You can contact a specialist for your financial needs through professional bodies. A professional body regulates accounting as a profession. The body admits individuals after they must have passed specific required tests. Professional bodies include:
Payments & Invoicing
Invoicing is a process of listing goods and stating their prices alongside. Invoicing comes before payments. However, they form an essential part of a business.
One of the first steps of trading is forwarding invoices to clients. The invoice prepared shows the list of goods ordered (type and quantity) and their prices which helps the customer make the final decision.
Types of Invoices
There are different types of invoices, and each invoice has a specific function. Hence, one must be informed about each invoice to determine their suitability. They are:
This invoice excludes tax feature. It involves businesses without GST (Goods and Services Tax) registration.
It is the opposite of regular invoices and involves GST (Goods and Services Tax) registration. The invoice also consists of GST prices with other information. A tax invoice is issued when the order is taxable or over $82.50 or when a client requests one. In the latest case, you may notify your client that you are not registered for GST.
There is a special kind of tax invoices known as RCTI (Recipient created tax invoices). In this case, the buyer is issued the tax invoice and is mainly used in agricultural business transactions.
There are guidelines you are required to follow to create a simple system of invoicing. They include:
- Using a reliable accounting tool
- Opening a company's bank account
- Make a list of your client's orders and details such as contact and postage address.
- Select a mode of payment
- Get in touch for feedback.
- Various Payment Systems
You are the primary determinant of how you receive payment and when you receive such compensation. There are various payment methods which include:
- POS transactions
- Card payments
- Offline payments
- Online payments
- Vouchers and Gift cards etc.
As a business owner, you must include debt clauses; consider your customers and evaluate your risks.
There are various reasons for seeking finance in a business. The primary reason for seeking finance is expansion. Others include accumulation of assets (property, vehicle, equipment etc.) and cash flow purposes. As a start-up, you may be required to borrow from family and friends; banks or take overdrafts or do crowdfunding. All these means are forms of gathering funds for practical set up.
Types of Loans
There are different types of loans which are:
This type of loan does not require any security or collateral. It has been described as one of the best loans for a start-up business.
It is another form of loan for business. It is distinct in that it may not be sourced from a bank or credit institutions. It is usually from money lenders.
This form of loan requires payment of low interest on the amount borrowed. It may also be a good option for a start-up business.
In large scale businesses, taking loans are inevitable. Sometimes, it could be overwhelming. However, you can learn how to deal with debts through the following:
- Determine your financial capability at the time that is debts versus your credits.
- Make settling your debt a priority.
- Contact the customers that owe you.
- Get in touch with your loan institutions.
- Seek help if need be
However, the best way is still not to be in debt. You can ensure this through effective involving and payment systems.
Taxation is a significant aspect of the financial transaction. It is therefore imperative that you educate yourself on the various tax requirements.
Types of Taxation
The federal body charges taxes while the state government sets others. They are listed as follows:
It is otherwise known as pension funds. It is usually higher than the usual wages required to pay all your workers regardless of the nature of their employment contracts. The least paid is 9.5% of an employee’s base earnings known as Super Guarantee.
This payment is made periodically and electronically in the required form. In essence, it must be of the standard that is paid through SuperStream. To use SuperStream, you must provide relevant information on your employees and linked with a reference number for payments.