To be a successful business owner, there are basic financial, accounting and legal principles to abide by. That will help your business to stabilise overtime.
Separate your personal and business banking accounts
Though at first this financial advice may seem elementary, you would be surprised how many business owners still keep the income from business with personal income. This is wrong and will not help you to keep proper records. So, even before your business really gets going, set up a separate business banking account. Just don’t mix your business and personal accounts.
Get an accountant
Find an accountant to prepare your annual tax returns, give you tax planning advice and keep your financial records.
The immediate past chairperson of the Society of Women Accountants of Nigeria (SWAN), Abuja chapter, Mrs Patience Katchy, said SMES would benefit a lot from employing the services of accountants.
“SMEs need accountants for them to be able to determine profitability in their businesses. Without an accountant, they may not be able to keep proper records.
“Also, financial records are very necessary for SMEs when they want to access bank loans. They need all those records to show. Without keeping your records, you may not be able to know your profitability. And if you don’t present financial statement or records to the bank, no bank will want to give you any loan,” she said.
Katchy added that lack of proper financial records was the reason why some SMEs folded up easily.
“Some SMEs do not know when their capital is depleting and they are running at a loss. That is why they need an accountant to keep such information.
“However, those who cannot afford the services of an accountant should keep the records themselves or get accounting apps. QuickBooks and Peachtree are great systems for small businesses as they are user-friendly even for non-accountants and easy to use.” Katchy warned.
Get legal advice
Getting legal advice will also help you as a business owner. They will guide you in writing agreements with clients and business partners.
Mrs Esesua Adeyemi, a business consultants and CEO JustAskSaisy said it is wise to put legal agreements in black and white. “Write agreements with business partners and clients down on paper. You can get a lawyer to guide you on this and also seek to know the legal implications on agreements you want to enter into. This will save you a lot.
“For instance you enter into partnership with someone and the agreement is that he/she gets 40 per cent of the profit from the business and you get 60 percent of the profit. At the onset of the business when the profit is still small, he/she may not mind.
“When the business begins to yield profit in millions, you will be surprised that the person will say you are getting too much. But, if you have an agreement on paper at the beginning with a lawyers consent, all you need do is bring out that agreement and it will stop further argument. Hence, any small business owner should make a lawyer his/her friend or hire one.”
Similarly, lawyers will help you understand rules, regulations and laws guiding the particular business you are into.
