It is a new year and one of your new year resolutions may be to start a business. Whether as a side hustle or full-time it doesn’t matter, it is still a business. I have compiled the following few pointers to assist in building your entity
1. Register your business
Having your entity registered will sort of force you to have all the lagalities in place. Have the name, registration number so you will be able to open a separate bank account for your Business. It will also be easy for people to do business with you. Having your brand identity, Invoicing clients for easy payments, etc. This will encourage more people to work with you.
2. Save a certain percentage every month from your profits
The main principle of business is to make a profit. And that in turn helps us achieve the secondary principle which is growth. The same way that you used to have a savings account under your personal capacity, we can implement the same habit in our businesses. Having money saved will help your business with the cash flow. You do not need to wait for invoices to be paid to keep a float. Cash flow is the heartbeat of every business. Money saved can aslo assist with buying more assets for the business.
3. Track your Fuel and travelling expenses when using one vehicle for both business and personal
When you are starting in business you obviously do not have much of assets to use for business thus you end up using the one car you have for both business and personal. To help control these expenses so that your personal expenses do not overlap to the business, please make sure you keep track of your mileages and fuel use. This will help you stay in control. In true essence your personal traveling expenses should be covered by your salary. Thus, if it is not possible yet, you need to help yourself by creating proper systems in place so you can remain disciplined.
4. Develop a Bookkeeping system / routine
You do not have to purchase an accounting software for this to be possible. You can make use of an excel spreadsheet to record all your transactions. If you can, please hire a Bookkeeper or an accountant on a retainer basis. They will help in making sure that the transactions are categorized accordingly. Where you may record a loan as an income for e.g a professional will help correct the Misallocation so the data captured reflects the true performance and position of your business. If you cannot afford to pay the retainer on a monthly basis please check if they have any flexible payment methods to accommodate you.
5. Earn a salary from the business
It is not easy but it is important. Your salary will help to cover your personal expenses. You need to still contribute towards your retirement savings, life covers, medical aid, insurances, etc.
6. Hire an Accountant who understands small businesses
An experienced finance person will help reduce tax obligations by introducing ways to save your cash. In South Africa we have various legal ways we can take advantage of to save up on taxes. Big businesses are exploring them, Small businesses must follow suite. This technicalties do not only help us in monetary value but assist in gaining momentum and exposure. You will have to consult with me at a fee to learn more on this
A lot goes into running a small business as you wear many hats as a start-up. Thus it is a lot easy to overlook this important factors and only realize when it is too late
Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting. Dikeledi is a registered Business Accountant and Tax Practitioner.
To book a consultation with her please email her personal assistant on PA@matsobanemetja.co.za