Corporate Tax Filing Guide for Businesses and CFOs
Corporate Tax Filing Guide for Businesses and CFOs If you want to grow a financially-healthy
Cash flow refers to the money that flows into and out of your company that is income and expenses. Cash flow is the ability to pay your bills, meet your employer and tax obligations and have enough cash available at the right moment.
You can simplify your business cashflow management by paying more attention to your records and reporting. You can plan for the future by managing your cash flow.
A cash flow projection or budget is the best way to ensure you have enough cash to pay your taxes and other obligations. This will allow you to:
Accounting for income or expenses can be a great way to keep your business running smoothly. It will give you an overview of when money can come in and go out, and highlight where you might need to spend your money.
When creating your cash flow budget, there are three things you should consider:
You can’t just set up a cash flow budget and leave it at that. You have the option to make your budget monthly, quarterly, or annually, depending on what is most important or useful.
Keep an eye on your budget and make adjustments as your business grows.
Be aware of significant differences between the budgeted amount and the actual results.
Include all fixed and expected variable costs. This includes rent, insurance and utilities as well as wages, equipment, and taxes like PAYG (pay as you go) installments or goods and services tax.
The results of your budget will assist you in making business decisions.
Cash flow refers to both the cash that enters the business and what is left. Cash inflows include payments received from clients or customers for products and/or services, interest payments, and any other receivables. Cash outflows can be anything the business needs to pay aside from on credit, such as payroll, leases, taxes, and other business expenses. Even though the company’s income statement might appear to be healthy, if the cash flow management is poor, the business could find itself in serious financial trouble.
A lack of adequate cash flow management in your business can be one of the biggest reasons why businesses fail. It’s important not only to record your company’s cash flow but also to understand how it impacts your business.
It is important to know the difference between cash and profit. Profit is an accounting principle to achieve financial gain. Cash is your actual money.
Let’s take, for example, that you invoice $500 to a client for work done. Some companies will immediately recognize a $500 profit when they send you the invoice. You will not receive the $500 cash until your collection is complete. It is important to understand the difference between profit & cash because it highlights the importance of collecting outstanding receivables.
Companies that cannot collect past due invoices and reconcile receivables can see a decrease in cash flow. Clients that pay late or not at all can impact your ability to pay your debts and run the business efficiently. If you have negative cash flow due to client payment issues, and don’t pay your obligations on time, this could impact your ability to obtain a loan for the future.
Your company’s growth potential is also affected by cash flow. Positive cash flow means you have more capital available to invest in new machines or locations for your business expansion plans. You have more money to invest the more cash you make. Negative cash flow can also force you to spend your cash reserves on paying creditors instead of investing in your business.
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