We discussed in our previous blog, we discussed:
- What money is exactly
- How to make your service more valuable and thus create more income
- How to keep a record of your incomings and outgoings in your business and personal life
- And most importantly how to control your money
It may be a good idea to go back and read that blog again to refresh your memory on these key points ⬇️⬇️⬇️
In this blog we are going to talk about another few key points;
- How to analyse your incomings and outgoings thus increase your profit margins
- What record keeping you need to do for the tax Man
That is one of the very important goals of any business.
How do you increase your profit?
We're going to put it very simply for you:
MAKE MORE THAN YOU SPEND
Hopefully after reading the last blog, you gathered up and started recording your incomings and expenses and also have started to set aside money for the future and the tax man / GST.
So you know should know how much you ‘need’ to make each week to cover all your expenses.
Now it is time to go through your expenses and see if there is any wastage. Is there anywhere you can cut down on things without compromising your service and business?
Have a look around…are you turning on the heating when it is not really needed? Are you buying flowers from a florist when you could get them cheaper from the supermarket? Are you letting product go to waste? Are you spending time waiting for clients to show up, when you could be earning money? Are you eating out every day? Are you gambling half your money on shares to buy into Wall Street?
Have a good look. You will see things money being spent (or not created) where it doesn’t have to be.
Write down what you find and work out a solution for each thing.
The next thing is to actually MAKE. MORE. THAN. YOU. SPEND.
After you have seen where you are wasting money, now to work at getting the value of each time you deliver to a client up, and more clients in the door.
There are some great tips on this in these blogs which I highly recommend reading…
MR TAX MAN
As discussed in part one, you will need to keep two sets of records
- Your own records of money in and where it needs to be distributed (known as an FP - Financial Planning)
- Records for Mr Tax Man. These are what you give to your accountant each quarter or each year.
It is recommend that you get an accountant to do your tax return for you and not attempt it yourself.
Mr Tax Man requires you list all your incomings and all your expenses. If you are registered for GST (find out from your accountant if you need to be) then you will need to submit your records each quarter. If you are not, then you will need to submit your records once a year in July.
It is very simple to do and it is recommended that you do it on a monthly basis rather than a weekly basis (your FP should be done weekly).
On a spreadsheet, list what the income was for that month in one column.
In the next column list all your expenses.
This is mostly easily done by going through your bank statement and listing out each time you spend money for that month and on what.
1.1.2019 BP - Petrol $56.20
4.1.2019 LocksLash - $126.50
4.1.2019 Rent - $2100
And so on.
It is a very good idea that you make all your transactions out (pay all your expenses) from just one bank account. This makes life a lot easier when you are recording all your expenses.
Also the Australian Government requires that you keep all receipts for payments for 3-7 years (you are best to look at this yourself as we are not Tax Agents nor do we represent the ATO).
An easy way to keep these instead of in a big box with a million bits of paper is to make them digital. There are apps you can sign up for like www.receiptbank.com.au where you simply take a photo of each receipt and email it to them and they log them in your account.
It may also pay to go and have a meeting with your accountant and see what they need and want from you each quarter/year in the way of records. They may even have a few tips for you too! Forming a good relationship with your accountant is a very intelligent thing to do.
We hope all this helps a little! If you have any questions then please drop us an email or give us a call 😘
(03) 9376 4426