Are you thinking of running your own business? There are plenty of reasons to embark on a career of entrepreneurship. Being your own boss is a big one, too. There is nothing quite like calling the shots and setting your schedule. Fortune is another reason.
While many startups flop, those that succeed can reach astronomical levels of revenue. Look at some homegrown examples of this, such as Atlassian and Canva. Both businesses started small and are not behemoths in their own right. So, it’s understandable if you want to set out and carve your own path in your career.
Yet running your own business means being in charge of the finances. If you’re not in the black then you’re in trouble. You need to know your numbers. From payroll outsourcing, timesheets, bookkeeping and taxes – you need to be on top of it. Let’s unpack this in more detail, so you can learn all you need to know about business finances.
Once you expand and wind up employing people to do everything that you’re too busy to do, you need to pay these people. And you need to pay them properly. In Australia, we have a complicated system of modern awards, which means that for every industry there is a basic hourly minimum wage. To avoid getting yourself in hot water you need to pay your people at least the award minimum. Paying above award is a great idea if you can afford it because you’ll attract top talent who will go the hard yards for you.
A payroll system is a business system which ensures that staff are paid on time, at the right rate and for each hour they’ve worked. Some companies do this in house, but outsourcing your payroll systems is a great way to save money. You can then focus your in-house talent on more important things, like marketing, strategy, and making money.
Bookkeeping – What is It?
Bookkeeping, put simply, is keeping track of your business’s income and expenses. Your books are records of all financial transactions. And yes, we mean everything. From buying milk for coffee, through to that huge payment a client just made for a three-year contract.
Once your business grows you’ll need to split your books into separate departments. Some examples include accounts receivable – the invoices you issue to get income. Accounts payable is the department that will pay your creditors what you owe them. You can either do this in-house or outsource it, there are pros and cons for each.
Here comes the fun part. Every business in Australia needs to lodge an income tax return at the start of each new financial year for the financial year past. This way you declare how much income you have made or how much revenue you have lost.
Then you find out how much income tax you need to pay. This is the domain of an accountant. Again, you might decide to hire one or you can use an external tax agent. Again, there are ups and downs to both options.
A Cash Conclusion
Here we’ve provided a basic overview of the three most common aspects of business finances. Payroll is the system ensuring your staff get paid on time and accurately, and it may be worth outsourcing this system. Bookkeeping is keeping track of all income and expenses. And finally, you’ll need to lodge a tax return each year. If you can’t keep on track with these three things you might want to consider another career path. Or if you’re too busy, hire in-house or outsource and focus on what’s important to you.
If you are interested in even more business-related articles and information from us here at Bit Rebels, then we have a lot to choose from.