Whether it means running a large company employing a significant number of staff or managing a smaller outfit that could be just a sole trader or contractor setup, managing business income can be a daunting task. For entrepreneurs and startups it can be particularly worrying, as many people might find themselves in unfamiliar situations and feel that they don’t have the skills they might need. However, there are really only a few main areas that must be addressed and once someone has a good understanding these can become much clearer and easier to manage.
Main problem areas
The causes of problems surrounding business income mainly fall into those that can be controlled and those that cannot. It’s a good idea to make contingency plans for any likely financial strain that might occur, such as an unexpected rise in lease or rental costs, interest rate rises, suppliers increasing their prices and so on. If a business keeps an eye on the wider field of finance and takes the relevant precautions, such as having the right insurance or building up a disaster fund, it should be able to weather these storms.
Any going concern will have to deal with the tax authorities in its home country, and often other countries that it operates in as well. Making sure that the taxation liabilities and responsibilities are covered is perhaps the single most important aspect of managing business income. Many operations that are successful and make a profit have experienced problems when outstanding tax bills catch up with them, so it is essential that this element of financial planning be prioritized. Taking advice from an accountant is probably the best way to deal with more complicated taxation issues, but for one-man band contractors or freelancers it is often quite straightforward to do some homework and look after things in-house.
For companies that employ staff, complying with regulations can become difficult. Not only are taxation systems in place that need to be adhered to, but depending on where employees are based there may be minimum wage levels and other rights and benefits that must be taken into account. Again, the size of the problem will only be apparent depending on the number of staff involved. A small startup employing a couple of temporary staff, friends or family members, may be able to get by on a slightly less formal arrangement or use profit sharing incentives in lieu of a salary. In most other instances, it might be easiest to use a third party to look after payroll arrangements on the company’s behalf.
One area in which using a third party provider really does make sense is that of invoicing. Making sure that a business is paid on time can be the single biggest factor in its ultimate success or failure. Cash flow problems can lead to having to take out expensive loans or even lead to subsequent deals falling through. When goods or services have been supplied, payment on the agreed terms should be forthcoming. Having a robust financial system in place to make sure this happens means making sure invoicing is carried out accurately and on time. Templates can be a great time and cost-saving device and they can provide an easily accessible overview of the financial state of a business at any time. Using a service such as invoicehome.com not only gives a company instant, professional-standard invoicing capabilities, it can also play a vital role in avoiding late or non-payments.
Path to success
Managing the income of your business does not mean accepting another costly layout of funds. In fact, by taking a hands-on approach and getting as much as possible done in-house, it can not only save money but also bring other benefits. Any entrepreneur or manager needs to know how all sides of his or her business is running and performing in order to make sure that it is trading profitably, and this really only becomes possible by knowing what the potential pitfalls are and making sure that they do not become full-blown problems. Thankfully, this is not difficult and should really come as second nature to anyone serious about managing a business. Taking an approach that mixes cost-saving DIY methods where possible and using a specialist third party when needed might be a fine balance, but when it is done properly, it is a recipe for success.