Budget
8 Bad Money Habits to Kick – Final 2
David Balwin
CPA | Accountant | Business Advisor
Welcome to the final blog in which we look at 8 money habits business owners should make sure are NOT occurring in their business.
Funding Tax liabilities at the last moment.
All business owners are certain of two things …. Cashflow will have ebbs and flows and there is always a tax liability in some shape or form.
Depending on the nature and size of the business various tax obligations and liabilities may apply. There is company tax, goods and services tax (GST), payroll tax to name but a few.
Unfortunately, some business do not plan for these liabilities and find themselves stressed and unsure where to find the money when the taxman comes knocking.
Like all good business practices, plan the business’s tax obligations and set up a process of putting the money away on an ongoing basis so it is there when payment is due. If need be, set up specific bank accounts for GST and long term liabilities so the money goes out of sight thereby reducing risk of spending by accident.
Saving what’s left after paying everyone else.
Debts have to be paid. Businesses need to establish good credit profiles in order to maintain good suppliers and financial arrangements. With cashflow in and required cashflow out not always dancing in harmony, business owners need to save along the way to ensure adequate funds when needed. Set a percentage of income to be saved on a regular basis and don’t rely on scraps if and when there maybe some. Also, manage the payment of bills ensuring they are paid on time but not necessarily the minute they come through the door. Budgeting and forecasting is another tool to stay on top of cashflow and the financial health of the business.
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8 Bad Money Habits to Kick – Part 3
David Balwin
CPA | Accountant | Business Advisor
Welcome to Part Three of four Blogs in which we will look at 8 money habits business owners should make sure are NOT occurring in their business.
Not seeing how the little things add up
“While I’m here I’ll just grab some of this and some of that – I’m sure we need it or it will be useful somehow in the business.” or “I know there is a fee if I withdraw from this ATM, however, my Bank’s ATM is outside and round the corner, and the time it would take me ….”
Sound familiar? It’s the little purchases and expenditures that start to add up and can significantly affect cashflow and health of the finances. Make sure you monitor what office supplies and purchases are needed and when .. and only spend to the plan! If you need to withdraw money, either keep a petty cash float or go the extra mile to your bank- those charges can really add up.
Generally think … do I need to spend that money … am I maximising the money I am spending … so there are no nasty surprises at month end.
Not planning for retirement.
Of course we’re planning for retirement … the retirement funding plan is established and superannuation is set up – usual questions such as, is there enough contribution and is the fund performing well, are being asked and monitored.
But what about the business at retirement time?
Plans need to be developed to migrate the business when it is time to enjoy the fruits of your labour. Is it intended to sell the business? If so, what lead time would need to be considered? Will the business be wound down? If so, how will this occur?
As with start up, at business end we need to plan, plan, plan.
Call me today if you need help managing your business’s wealth – (07) 3264 4783
8 Bad Money Habits to Kick – Part 2
David Balwin
CPA | Accountant | Business Advisor
Welcome to Part Two of four blogs in which we are looking at 8 money habits business owners should make sure are NOT occurring in their business.
So far we have looked at:
- Spending without a Budget
- Carrying a Balance on Credit Cards
Read on for this blog’s money habits not to have.
Not Monitoring Interest Rates
Whether it is your investment rate or what you could get on a borrowing refinancing it pays to continuously monitor borrowing and investing prices. No one wants to lose money if they could have got a better investment rate – and no one wants to pay more than they have to for debt. With profit margins reducing and costs of running businesses rising it is good management to stay on top of interest rates and trends which impact both your business and personal finances.
Not properly insuring for income protection and disability
Anyone who runs their own business and supporting themselves needs to consciously assess the risks of not properly insuring for loss of income due to injury or illness. If something prevents you from working for a few weeks or more, proper insurance could be the difference between tightening the businesses expenditure for a while until you are back on your feet and closing the doors. Business insurance coverage can be expensive with defined conditions. Do your homework and shop around for the best value for money for your price range. Remember, with the benefits of being your own boss comes the responsibility to ensure proper business coverage.
If you wish to find out more, follow our Blogs or contact Balanix Solutions for a free one hour consultation.
8 Bad Money Habits to Kick – Part 1
David Balwin
CPA | Accountant | Business Advisor
Generally, I am seeing and hearing slight improvement in business confidence now and for the future. This is a great time to take stock of money habits and put in place improvements to strengthen your business. Over four Blogs, we will look at eight money habits business Owners/Managers should make sure are NOT occurring in their business.
Spending without a Budget
When in business, there is a tendency to focus on sales/billable hours and customer service, without always keeping an eye on what it is costing to provide these services and products. It is vital, to ensure success of a business, to operate with a budget. Business owners need to plan and monitor for the money going out as much as for the money coming in.
Businesses owners need to forecast and track expenditure to understand and optimise where the money is going. Businesses owners also need to account for the non regular spending and perhaps put a bit aside for the emergencies.
Carrying a Balance on Credit Cards
Carrying a balance on credit cards is a very expensive way to do business. Even with relatively small amounts owing, add up over time. For example, if a business is carrying $5,000 on a credit facility with a 18% rate, and makes minimum repayments each month, it would take approximately 26 years to pay the debt off at an all up approximate cost of $12,000 (assuming the original debt is never increased, payments are made on time and not fees are incurred).
Consider paying credit balances in full each month. If budgets and cashflows have been developed and are being monitored, utilising credit should be manageable. If an unforeseen situation arose requiring an emergency use of the credit facility, consider not using credit again until the balance is paid in full.
If you wish to find out more, follow our Blogs or contact Balanix Solutions for a free one hour consultation.
