Tips on managing your small business finances

Do you run your own business? As of June 2015, there were more than 2.1 million active businesses in Australia, from sole traders to large corporations¹. But over the preceding year, Australian businesses had an exit rate of 12.4 per cent.

Handling your money efficiently can be crucial, especially in the crowded Small to Medium enterprise (SME) market. But how do you make sure you effectively manage your small business finances?

Keep the books in order

Profit and loss statements as well as balance sheets. The Australian Taxation Office requires that you keep your business records in order, easily accessible and legible, for at least five years². But exactly what paperwork are you supposed to have?

• Statements from your business accounts and credit cards
• Payments to employees and any PAYG tax
• Invoices and receipts for goods and services, both bought and sold
• Register of assets and stocktake details

You may also like to consider collating your business cash flow with a profit and loss forecast for your financial year. There could be plenty of paperwork, but staying on top of it may help you efficiently do your taxes, see exactly how well the business is doing and could assist in providing insight for your next big business decision.

Work out your limits

Similarly, as you would when buying a house with a home loan, Australian SME owners may need to consider their financing limits. Taking out a business loan for a new site expansion or company growth may help with your future plans to expand your small business.

What factors should you consider?

Try to consider all of the variables. What kind of assets do you have as security for a business loan, and how much are they worth? What repayments can you feasibly afford over the set term? What's your loan value ratio, and how big a deposit will you need? At IMB, we have a wide range of business finance products and services that cater to businesses both small and large. Our personalised service means we can help you find a financial solution that may fit your business needs.

Enquire about a loan to help fund your small business growth

Source:

¹Australian Bureau of Statistics

²Business Victoria

³CCH Research

⁴Business.gov.au

_{This article has been prepared by IMB Bank for general information and reference and it is not intended to be advice. It does not take into account your objectives, financial situation or needs. You should seek your own legal, accounting, financial or other professional advice when appropriate, and consider the relevant Terms and Conditions or Product Disclosure Statement before deciding whether to acquire any products or services offered by IMB Bank. We do not recommend any third party products or services referred to in this article and we are not liable in relation to them. Any links to third party websites are for your information and we do not endorse any content on those sites.}