Maintaining a smooth cash flow can be challenging, even during the best times. Yet, it is crucial for the sustainability and success of your small business.
Lift Accounting and Advisory understands the challenges you face, which is why we have some practical tips to help you navigate financial uncertainties confidently.
Here are our 5 top tips for healthier business cash flow:
1. Establish a Dedicated Bank Account:
One of the fundamental steps in managing your cash flow effectively is setting up a separate business bank account. This dedicated account will streamline your financial transactions, making it easier to track income and expenses and, most importantly, ensure your business and personal finances remain distinct.
2. Regularly Allocate For GST:
To avoid any last-minute headaches, it’s wise to set aside funds regularly for Goods and Services Tax (GST). Whether you prefer weekly transfers or per-payment allocations, this proactive approach will help you comply with your tax obligations, ensuring you have the necessary funds set aside when settling your GST liabilities.
3. Proactive Tax Planning:
Planning for your company and personal tax obligations is essential for maintaining a healthy cash flow. Allocate a consistent amount regularly, ideally weekly, to build a fund for upcoming tax payments. Doing this consistently throughout the year is much easier than paying $250,000 at the end of the financial year.
Collaborate with your advisor to estimate the correct percentage of your turnover that should be earmarked for tax payments, ensuring you are well-prepared come tax time.
4. Timely Payroll Management:
Managing your staff payments diligently is crucial to maintaining your cash flow. Set aside the Pay As You Go Withholding (PAYGW) and Superannuation contributions each pay cycle to avoid last-minute financial strain. Budgeting like this ensures compliance with employment regulations and fosters a positive work environment by meeting your obligations to your valued team members.
5. Consult With Your Advisor:
Your relationship with your advisor is vital to successful financial management. Regularly consult them to estimate the percentage of your turnover that should be set aside for GST, tax payments, and other financial obligations.
Working together ensures that you clearly understand your financial responsibilities and helps you make informed decisions to safeguard your business’s financial health.
Please do not hesitate to contact us if you could use more support or would like more tips to run a smooth cash flow.
We understand that every dollar matters. By implementing these tips, you’ll be better equipped to manage your cash flow effectively, ensuring your small business’s financial stability and prosperity.
Lift Accounting is committed to combining our professional expertise with a compassionate understanding of the unique challenges faced by Australian small business owners.
Reach out by emailing office@liftaccounting.au or call (02) 4344 2460.
