Launching Your Business Right: Avoiding Common Setup Mistakes

Starting a new business can be totally insane but as there are so many things to think about sometimes the minutae of “setting up your business” is overlooked. Then, once patterns are set it can be hard to change things, because you are just so busy. Then, what started out as a minor oversight turns into a major hindrance to your running of the business.

1. Neglecting bank accounts & financial reporting

In the fast-paced world of small business, overlooking regular account checks is a common pitfall. Whether it's monitoring cash flow, tracking expenses, or identifying discrepancies, business owners must actively engage with their financial accounts via fully reconciled accounting software. I’ve seen businesses ignore what’s in Xero, happily tracking their bills paid in an excel spreadsheet. As a business owner, one needs to either get a bookkeeper or engage with your current bookkeeper and request up to date reports such as the Profit and Loss in conjunction with the Balance Sheet.

Recommendation: Regular reviews of the bank statements & accounting software to check that they match + Regular review of P & L and balance sheets. Get a BAS Agent/bookkeeper if you don’t have one already!

2. Banking & accounting software ignorance

Accounting software is basically, essential for business. However, some business owners underestimate the importance of staying across their accounting software, ensuring what’s in the accounts matches the bank statements. One must not simply rely on an employee for this, the business owner needs to be an approver of transactions within the software as well as the final approver at the bank.

Recommendation: Regularly log into your accounting software to approve payments and check the numbers look the same as what’s in your bank accounts. AND make sure you are the final approver at the bank.

3. Failing to set up a bank account sufficient for your needs

Mixing personal and business finances is a recipe for confusion and potential legal issues. For Sole Traders, a dedicated business bank account not only adds a layer of professionalism but also simplifies financial tracking and reporting. It’s a good idea to register a Business Name as well if you haven’t already. In addition, for businesses with frequent multiple payments to make (after a shoot for instance) a bank account on a business banking platform is required to accommodate bulk payments, higher withdrawal limits and primary and secondary authorisation facilities. One thing to remember is that a bank account can take up to 2 weeks to get set up and you the last thing you need when you are super busy running the show is having to go to a bank branch in person to sign a last minute document.

Recommendation: Talk to your bank about what you intend to do so the right kind of business account is functioning from the start.

4. Did you know you can make bulk payments?

Following on from #3, Bulk Payments will save you a lot of hassle, but if you are just starting out in business how the hell would you even know they exist?! I’ve seen this happen for many small businesses, and it wastes a lot of valuable time paying each contractor one by one via the bank. For businesses making multiple payments regularly, setting up a proper business banking platform is a lifesaver! This platform should allow for bulk payments, set withdrawal limits (especially above $20k), and provide access for professional bookkeeping purposes. Having the business owner as the final approver ensures financial control and transparency.

Recommendation: Speak to your bank early on about your needs for the business, don’t leave it to the last minute.

Here’s your business set up checklist:

Regular Account Checks: Schedule regular reviews of your business accounts to stay on top of cash flow and your bank balance.

Secure Accounting Software Logins: Keep track of your accounting software and banking logins, ensuring your regular access/ approvals and appropriate level access for employees.

Dedicated Business Bank Account: Establish a separate business bank account to keep personal and business finances distinct. Speak to your bank about what you are going to need for your particular business and managing its likely turnover.

Business Banking Platform: Utilise a business banking platform that accommodates bulk payments, appropriate withdrawal limits and provides necessary access for financial management. If you are hiring an external bookkeeper, you will need the facility for your bookkeeper to upload payments with the business owner being the final approver.

I’ve seen business owners hit a hurdle when their business processes and banking aren’t planned well from the start. If you are ready to set up your business and looking for Finance Management book an appointment with me here