Keep track of your money
Business finance is about managing money related to your business, for example:
- how much money you have, and where it is
- when you’ll get more, and for what
- who you must pay, and when.
Set yourself up for success
Understanding your finances is essential to business success. An understanding helps you:
- see how well your business is doing
- make smart decisions about what and when to spend
- make sure you have enough money to pay bills on time
- provide accurate information if you apply for investments or loans
- set and achieve your business goals.
Top tips for managing your finances
Keep your business finances in check by avoiding these common mistakes:
- Not having access to records that help you understand your finances.
- Spending money in your bank account, not realising it's for bills.
- Not saving money as you go to cover your taxes and levies.
- Invoicing late and not chasing debtors — this can impact your cash flow.
- Not getting advice when you need it or trying to do it all yourself.
Get to know four tools and reports
You’ll need a few things to keep track of your money and know how well your business is doing. Here are the top four tools and reports that can help:
- Cash flow report — a report that tells you how much money is coming into and going out of your business.
- Budget — your plan about how much you’ll earn and spend over a certain time.
- Profit and loss statement — a summary of how much you’ve earned and spent over a financial year (sometimes called an income statement).
- Balance sheet — a snapshot of how much you own and how much you owe on a certain date.
Understand the basics of business tax
Understanding business taxes and when they apply will help you manage your money better. The exact details will depend on your situation, like how much you earn and what your business structure is.
The main types of tax are:
- Income and provisional tax — applies to everyone who earns money in New Zealand. Provisional tax is income tax you pay in advance and in instalments.
- Schedular payments — many contractors can ask for income tax to be deducted before they get paid.
- Goods and services tax (GST) — you must register for GST if you expect to earn more than $60,000 in 12 months.
- ACC levies — funds work-related injuries.
- Employee-related taxes — for example PAYE (pay as you earn) and fringe benefit tax (FBT).
Ask for help if you need it
Getting professional help with your finances could be a good idea. For example, if your business is complex, if you’re too busy or if numbers just aren’t your thing.
Often a good accountant or bookkeeper can save you more than what you pay them. They can add value in many ways, including:
- helping you understand your finances
- advising you on big financial decisions
- telling you if you’re meeting your obligations.
What's next
Guide to business tax
Paying employees
Reducing your tax bill
Funding your business
Getting government grants