Keeping company finances in check is usually the last thing on an entrepreneur’s mind when they have the initial vision. When aspiring millionaire’s start up their first small business, their minds are often set on wider aims such as expanding their brand’s reputation, generating revenue, creating a network of contacts and marketing their product well. Insolvency and closing the business are the last things on their enthusiastic and keen minds.

Ensuring that your company’s finances are managed properly

Whilst these areas are indeed essential to ensuring the company’s long term success, this often leads to many small business owners neglecting pivotal issues to do with the ordering of their finances, such as efficient bookkeeping, invoice set ups and taxation obligations. These areas may not be exciting as developing more sales but if neglected cashflow restrictions will follow and insolvency will loom. Ensuring that your company’s finances are managed properly is arguably the most important measure for small businesses to concentrate on initially, as it will stop them overstretching themselves financially.

Overtrading is as bad as not bring in any sales at all in practical terms so making sure your administration keeps up with sales is critical. By keeping accurate records the company will avoid insolvency and will allow the directors to always be able to clearly ascertain how much they can afford to allocate towards other areas of business, such as to do with branding and marketing. Even more significantly, it will ensure that you know where you stand in regards to your company’s tax obligations and avoid HMRC problems, and will always meet your employee’s wage payments on time as well. And furthermore, you can make sure all your clients make their payments on time, and can manage all invoices to and from your account in a more orderly manner.

There are a number of simple steps that can be undertaken from the offset of your businesses lifespan to ensure your finances are in check, so that you can proceed with the more glittery and appealing areas of generating profit and marketing your product, without having to be apprehensive that you have lost control of your finances and monetary situation.Below are five measures to consider when trying to avoid company insolvency and structuring your businesses finances, so that your company never has to deal with problems from the taxman/HMRC or any disgruntled employees in the future, and more importantly, does not fall into the classic trap of accumulating high levels of debt through the basic mistake of poor financial management.

1) Keep your business and personal finances distinct and apart.

A number of new company directors, particularly sole owners, often neglect to divide their bank accounts, bookkeeping and other expenditure between their personal finances and business finances, with inevitably leads to problems later on down the line. The confusion arises as to how you separate what you owe with your business tax and income tax individually.

By keeping your business and personal finances separate at all times, you will avoid having to undergo a confusing and laborious process of dividing them later on down the line for tax purposes and should also ensure that no legal problems arise from tax conflation between your two accounts.

2) Use your accountant at all times.

If you have an accountant at your disposal, then you should maximise their worth by utilising them at all times. If used well, accountants can be an excellent means of shielding you from any tax and financial problems at a later stage , and can undertake the process of keeping your company’s finances in check on your behalf, so that you don’t have to.

It is important that you should always give your accountant precise information from your company’s financial book, and pass them all of your company’s expenditure, income, and employee invoice data to them on a regular basis. This will make their job a great deal easier, and will mean they can instruct you on the best measures to take to make sure all your employees are all paid on time; you meet all of your tax obligations and do not overstretch your company finances.

Moreover, if you have doubts about the way you keep your books, then you should ask them to look over them on a regular basis and get them to create reports on the state of your finances, so that you always have a good idea of where you are at. Avoiding insolvent situations can often be as simple as sitting down more frequently with your accountant

3) Make sure all of your billing and the invoicing is done online.

Making sure that your perform all of your billing online can make the entire process simple, clear and easily tracked, so that you always know where the money which is leaving your account is going. Being paid on time can improve poor cash-flow immediately, so carefully manage all the due invoices.

One highly recommended online invoice program is, which has attracted a huge user base due to the seamless and simple manner in which it enables users to manage and their company’s payments, billing and employee invoices.  Moreover, it comes along with cloud based accounting software that you can utilise in order to process your invoices with your companies branded insignia included.

You can also set up auto-billing so that you can take the money you are owed on the date previously agreed between you and your customer. Late payment fees can also be applied through the software, so if you are keen make sure that your clients uphold their financial agreements then using Sage One is a highly useful tool to achieving this aim.

If you find that Freshbook is not for you, then you can also look at Sage One, which is an easy to use online accounting and invoice tool that is specifically tailored for small businesses. The program can enable you to process and manage your purchase and sale invoices and VAT returns as well as giving you regular reports about your company’s income, outgoings and market performance in different areas. Using Sage One is also beneficial for your clientele, as they can easily process payments to your business through a credit card transaction or via PayPal. You can also keep track of the status of your client’s payments and your own invoices with a by receiving live alerts to your computer if they fail to make their financial obligations to you on time. By having alerts in place this will act as a trigger so you can avoid any restrictions on cash-flow and tipping the company into an insolvent situation.

The Sage One payroll facility can also help you manage your employee’s payments, administer it on your behalf, and send in their payslip submissions to the HMRC. As such, it is an invaluable tool to preventing PAYE tax and employee problems in the future, and is only one of many features worth looking at on Sage One if you want to improve the way in which you manage your company’s finances.

4) Keep your bookkeeping online and in particular on QuickBooks.

Bookkeeping online is an essential step to ensuring you are on top of your finances, and are confident that all your commitments are being met on time. Often, online tools for this purpose are relatively cheap, but can monitor all of your businesses income and expenses, so your cash-flow is well and truly in check. Furthermore, you can utilise the tool to ensure you are paid quicker by your clients, avoiding insolvency completely and can set up employee wage payments as well. The best online bookkeeping software at present is QuickBooks, which comes with a small monthly fee of around £25 a month, which is a steal considering how effective it is for keeping your finances in order and preventing poor cash-flow problems in the future. The software comes with a trial, so try it out and see if it benefits your company.

5) Evaluate your financial documents on a regular basis.

Though this is a simple and basic piece of advice, many often fail to adhere to it, and this can have a detrimental effect on their company’s finances as the company develops. If your business’ revenue and expenditure fluctuates each day, then make sure that your bookkeeping is consistently kept up to date, and make a note of the disparity in your money usage.

Categorising your money related activity into clear areas such as credit transactions, cash transactions, number of sales and purchases will also make it easier to ascertain the tax you have to pay in the future, as well as giving you a clear idea of how your business is performing and where it is excelling best.

It is also worth evaluating all of your business and balance accounts statements on a consistent basis, and put their continents onto your records as soon as possible, so that they are not forgotten at a later stage.