Only a small percentage of people
actually understand their accounts! The global economy maybe showing
signs of recovery but the depression is far from over and fears of a
pull back on recent growth still linger in the back of the mind.
Indeed, another financial crisis might be just around the corner, and
before it hits we think it is time to know exactly what you should be
doing to protect your business against future events.
What you need to know about basic
accountancy
Businesses and consumers should have
an understanding of their accounts and at least a basic knowledge of accountancy. Firstly you need to build a complete picture of your
total income to the total expenditure and that incredibly important
and elusive figure of disposable income.
However the disposable income should
never just be considered ‘spending money’. Think of the bigger
picture! A percentage of this important figure should be saved, a
portion used for future build, and then a small amount just used as
free spending. Savings should be the bigger portion as this will
carry you through financial turbulence.
Future build is about expanding and
developing. If you are an SME owner, do you have any plans to fall
back on if your product or service loses its demand? This pot of gold
is for you to invest in diversifying your business. If you are an
employee or self-employed, do you have a plan if you are made
redundant or a greater income.
You should also put some spending
money aside, but keep this sum to a minimum – don´t overstretch
your budget. The less you spend here means the more you are
developing your future or creating a pot of gold to look after
yourself through lean financial hardship.
When do we need to get help to deal
with the more complex accountancy issues?
If you are self-employed, you are
entitled to tax breaks on your income, but a lot of business owners
do not realise where they can save money. For example, if you work
from home, you can claim gas and electricity as a business expense.
An accountant will be able to help you work out all of these possible
and helpful tax deductions.
You may also need a financial advisor or broker if you are investing in a retirement fund or any other type
of investment. Try and keep your investments safe, but remember some
people liken investing to gambling, so only invest what you can
afford to lose if the worst should happen. Remember, if you see a
profit in your investment cash it in unless you are sure it’s worth
holding for a bigger profit.
Understanding your finances does not
have to be complicated. It is important to simplify things so that
you know exactly what you can afford to do and what your goals are
for the future. If we had a little help and advice, we could be
preparing for the unexpected and still living for the moment. For
individuals and SME’s alike it’s time to prepare for the future
and get ahead of your peers. You will understand what percentages of
the disposable balance should be saved and what should be used to
grow your businesses and investments.
Be proactive with your finances and
set yourself clear goals for the future.
The above article has posted by Amy Lewis, owner of the finance corner. For more details about Amy you can visit her social media profiles in below mentioned urls:
Facebook: http://www.facebook.com/lewisamy3
Twitter: http://twitter.com/lewisamy3
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