Top 10 FAQs : 2. How should I manage my finances each month as a business owner?

Top 10 Finance Questions Encountered By Every Entrepreneur: #2 How Should I Manage My Finances Each Month?

Trying to figure out what you are actually meant to be doing with your finances each month as a business owner can feel overwhelming! And building up the enthusiasm and discipline to actually do it – is sometimes even harder….

That’s why I’m going to share with you some simple ways to manage your finances that you can go off and start doing immediately, to help you boost your finance confidence and habits. And it could only take you as little as half an hour a month!

Before we get into the monthly finance routines let’s start with some:

Starting Points to Simple Finances

  1. Have a separate business bank account

Make sure you have a separate business bank account for your business transactions to go through. That way you keep a clean separate between business and personal spending. This  will make tracking your business costs easier, cleaner and means you’re better placed to set more costs against tax – and of course it looks more professional too.

This is an a ‘must do’ for a limited company and very strongly recommended for a soletrader business. And it’s also helpful to have the banking apps in regular use on your phone so you can keep a track of the ins and outs and monitor what’s going on. With more modern banks, like Monzo, you can even schedule for the app to set aside a % as a tax estimate.  

2.Decide on your accounting system

If you are a limited company or a VAT registered sole trader you will need to use digital accounting software to manage and record your finances. If you are a soletrader you can currently still use offline systems (such as a spreadsheet), though this is set to change when further Making Tax Digital Legislation comes in  (currently delayed till April 2026.

My preferred accounting software choice is Xero,  its works well with lots of other apps and systems, gives really useful reports and analytics.  It’ll grow with you and is pleasant to use even if you don’t understand accounting terminology that well.

For a soletrader Freeagent is also pretty good and is also free with a number of  banks. Another free ‘starter’ option is Wave. Both allow you to track your income and expenses and create invoices and more.

If you are looking to use a spreadsheet, then I have a template you can use as a google sheet.

3. Manage your receipts and purchase invoices on the go.

It’s good practice to retain evidence of receipts/invoices relating to all your business costs. This is something that if you are VAT registered, you must do, in order to reclaim the VAT and for un-incorporated/non VAT registered businesses you need to be able to satisfy HMRC that the transaction took place – and a receipt/invoice is pretty good for that!

I recommend setting up an online folder, inbox etc. where you digitally gather up your receipts and invoices. With accounting software like Xero you can make a unique inbox so your invoices and receipts appear directly into your records, and with Dext it will even automatically code it for you.

If you travel about a fair bit, and paper receipts are involved, then I recommend either snapping a photo and email it to your invoice gathering place, or simply keep then somewhere safe like in a special part of your laptop bag ready to sort later!

Note you must keep  hold of these records, such as copies of invoices, for 5 years as a soletrader, 6 years for a limited company. The good bit is you are able to keep electronic copies.

4. Schedule a regular time you when you will sort your monthly finance tasks

If you’re looking to build good routines with this, and avoid spending a whole day scrabbling about trying to sort it at the last minute for your tax return (!), then I recommend making a diary appointment with yourself, where you set aside some time to do your monthly finance tasks. Even a 30 minute block in your calendar will make all the difference! 

Monthly checklist

We’ve talked a bit about setting yourself up for success, with a separate bank account, an accounting system, a method to manage receipts/invoices and a regular time when you will review your finances. So now its time to look at what the monthly finance checklist looks like.

✅ Reconcile your bank account/record your transactions for the month.

✅Add on any personal expenses that for whatever reason went on your personal account.

✅ Invoice your customers, you might well do this one the go throughout the month, if so its a good time to review that you’ve billed for everything.

Record your business miles for the month if you did any business journeys in your personal vehicle (follow the link for how to).

✅Update your working from home allowance calculation/tracker (follow the link for an approach to take with that).

✅ Chase up any unpaid client balances owed to you.

✅ Review your income/expenses for the month to check for accuracy and help plan for future month.

✅ Pay yourself and allocate money for tax and other things!

 Now there might be other things you need to do depending on your set up and industry, but that is designed to be a good general checklist for a typical business.

If you’re starting to wonder what kinds of things you can and can’t claim – don’t worry we’v got that covered in a future tip!

Any questions on that, feel free to reach out!

Hi, I’m Harriet, your trusted CFO, Business Growth Specialist, and Finance Educator.

I am the founder of Below The Line Finance and my mission is to financially empowering creative entrepreneurs to build aligned businesses  – with profit, purpose and healthy cashflows!  With my collaborative and supportive approach, I am dedicated to guiding you to greater confidence and success with your business finances. What could you accomplish with your very own Mini CFO?

Let’s stay in touch:

Together we can say goodbye to fear and confusion, build solid finance foundations and step into a supportive environment where you can turn your dreams into a reality through bespoke finance strategy.