If starting a business is not something that you have not done before, keeping track of finances could be a very complex and sometimes an overwhelming task. Even though there are many acronyms and accounting terminology that a layman may not understand – here are few steps to get you started.
The most important step in keeping your finances, is document every expenditure and gain for a financial year. Always retain receipts and write down all non-receipted expenditures as you go. You do not need complex accounting software to do this, just use a simple journal. Keep a note of the amount spent or received, date, source and purpose. If you have a lot of cash coming in, but there is barely some leftover at the end of the month, it could be a reason that that there are many undocumented cash expenses in your account.
Another important point is, always keep business and personal finances separate. Of course as a small business owner you will need access to both sources at difficult times, however keep a track of where the money goes. Whenever you withdraw more than allocated amount from either of the accounts, be disciplined to work a little harder to pay that back as soon as possible.
Learn about the tax-deductions and exceptions in your industry. Governments give tax exceptions to some expenses for your personal services because you are the business owner. Therefore spend some time learning about the taxation rules and benefits that can affect your business both positively and negatively.