Running your own small business is never easy, and managing your finances successfully is perhaps one of the biggest challenges of all. A lack of insight and inexperience can result in expensive issues that impact the viability of your business. Here are some common financial mistakes that accountancy practices in Northamptonshire see small business owners making, and ways to avoid them:

1. Mixing up finances

Your business and personal finances are different and must remain so. Most accountants say that they see these financial mistakes regularly. When business owners mix up their finances, it becomes difficult to track expenses and claim deductions. To avoid the issue, maintain a separate business bank account and obtain a standalone business debit or credit card used solely for business expenses.

2. Not keeping accurate records

It’s essential to keep accurate financial records as a small business owner, so you can make informed decisions about your business. These records include your books, profit and loss account and balance sheet. Hiring an accountant and using bookkeeping software is worth the time and money. If you’re considering chartered accountants, Northampton is home to experts Jervis and Partners.

3. Not understanding the ins and outs of cash flow

Simply put, cash flow is the lifeblood of your business and you must understand the difference between cash flow and profit. For example, it’s vital to have a cash flow statement that flags the inflow and outflow of your business cash and shows its overall cash position. Always seek to have a healthy cash flow to cover any unexpected business events and aim to have a healthy overdraft that can help manage any short-term variations in your business balance.

4. Tending to inflate sales

Again, many small business owners tend to overestimate their sales, which leads to overspending and overproduction. It’s vital to have a realistic and manageable sales forecast that is based on industry trends and market research, rather than optimism!

5. Over-leveraging the business

It’s easy to take on too much debt in your business, but it can harm your business viability. Whether you’re taking on debt to fund investment, an expansion, or to manage a dip in your cash flow, it’s vital to know how you will pay the funds back. Good accountancy practices in Northamptonshire can advise their clients further on this matter.

6. Not saving for taxes

Chartered accountants Northampton -wide find that their clients often forget to save for their taxes and then struggle to meet these bills. Your accountant can help you to estimate your tax bill beforehand so you can save enough throughout the year to meet your bill in a timely fashion. This will prevent last-minute stress and any penalties as a result of late payment.

7. And lastly, not using accountancy practices in Northamptonshire

Most small business owners simply don’t have the expertise or time to manage the financial elements of a business. A reputable accountancy firm can take on this job for you and manage it expertly, saving you time, money and hassle in the process. If you’re serious about the success of your business, this can be a wise investment in its long-term health and viability.