When you are doing better than you think you are…
You are getting sales, your bank account is healthy, you can pay yourself and you’re eyeing up a few snazzy outfits/planning a holiday/picking out a Porsche. Happy days! Bookkeeping is boring and you have more exciting things to worry about (like spending your pennies!)….
1. With great power comes great responsibility! The more you make, the higher the tax you pay. Don’t get carried away and end up with an unpayable bill.
2. When we feel flush, we don’t pay as much attention to the details. You may be paying out on unnecessary expenditure.
3. You need to keep an eye on what you’re owed. Finding out that you haven’t been paid for something 6 months later makes it much harder to chase up. Queries should be deal with promptly.
When you aren’t doing as well as you think you are…
Sometimes you will just be ticking over. You have enough sales coming in to pay last month’s bills, but if the proverbial hits the fan (maybe a pandemic or something *shrugs at the unlikely*) and the sales stop dead, you will be in a whole heap of bother.
1. You have cash in the bank, so you keep spending without keeping track of your outgoings. You end up unable to pay your suppliers (or worse, the tax man).
2. You think you have more coming in and less going out. At some point you’re going to come to a cash-flow dip, and you may end up having to borrow your way out of it.
3. You commit to business spending that you can’t afford.
Wherever you stand, you need to be keeping on top of your numbers. In 2020 it has been especially important. Tracking your income and expenditure could make or break your business at a time of constant change. So many small businesses don’t analyse their finances until way after the year end. They work on the basis that if there is cash in the bank then they’ll be ok, but it may well not be the case.
If you need some support because you don’t know where to start, or you just need another pair of hands, get in touch here and find out how BYOB can help you.