Fi­nan­cial ad­vice for new business own­ers

Daily Trust - - BUSINESS - By Vic­to­ria Onehi

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 nonac­coun­tants 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.

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