Mediaboss Marketing

Open a Business Bank Account

Keep your business and personal finances separate. If your business structure is a company, trust or partnership, then you legally need a separate bank account for tax purposes. Even if you are a sole trader, setting up a separate bank account will help you manage your finances and keep track of business expenditure and profits. Many Australian banks offer dedicated business accounts, many with no monthly fee, so its worth doing your homework on which one would suit you best.

This business bank account can be used for your business transactions, such as paying suppliers or invoicing customers. Most times, a bank will require a separate business bank account in order to issue a business loan or line of credit.

If you sell a product, you need an inventory function in your accounting software to manage and track inventory. The software should have ledger and journal entries and the ability to generate financial statements.

Some software programs double as bookkeeping tools. These often include features such as check writing and managing receivables and payables. You can also use this software to track your income and expenses, generate invoices, run reports and calculate taxes.

There are many bookkeeping services available that can do all of this for you, and more. These services can be accessed online from any computer or mobile device and often include features such as invoicing. Check out the range of accounting software for small businesses in the market, or see if you want to handle the bookkeeping yourself.

Before you fund your business, you must get an idea of your startup costs. To determine these, make a list of all the physical supplies you need, estimate the cost of any professional services you will require, determine the price of any licenses or permits required to operate and calculate the cost of office space or other real estate. Add in the costs of payroll and overheads, if applicable.

Businesses can take years to turn a profit, so its better to overestimate the startup costs and have too much money than too little. Many experts recommend having enough cash on hand to cover six months of operating expenses.

When you know how much you need to get started with your business, you need to know the point at which your business makes money. This figure is your break-even point.

Break-even point = Fixed cost Contribution margin

In contrast, thecontribution margin = total sales revenue cost to make product

For example, lets say youre starting a small business that sells miniature birdhouses for fairy gardens. You have determined that it will cost you $500 in startup costs. Your variable costs are $0.40 per birdhouse produced, and you sell them for $1.50 each.

Lets write these out so its easy to follow:

This means that you need to sell at least 456 units just to cover your costs. If you can sell more than 456 units in your first month, you will make a profit.

Read more here:
How To Start A Business In 11 Steps (2023 Guide) - Forbes