Millennials, Get Your Finances Under Wraps!

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While most Millennials will have received a thorough education in various areas of knowledge, many will have complained about the same thing at some point or another: we aren’t taught enough practical things. Yes, we may well be able to do trigonometry, or analyze a short poem by Christina Rossetti. But when it comes to taking care of the must-do tasks that we face in adult life, many of us are left clueless. Finances and accounts tend to be a couple of these areas. Sadly, we are launched into the grown up world and expected to just know how to do these things. But not to worry. That’s where we can come to the rescue. Here are a few necessary pieces of information to help you get your personal accounts and business accounts under wraps in no time.

Business

Let’s start with business. Why? Well, because this area is generally where larger quantities of money tend to be involved, and you can consequently get into more serious trouble if things don’t add up properly. If possible, work hand in hand with a bookkeeping firm who will be able to keep on top of all of your internal and external reporting. This removes issues and ensures that someone who is fully qualified and competent is taking care of things. However, it’s always good to have a general idea of what’s going on. There are several types of accounts that you can have when it comes to business, so let’s quickly differentiate between the different types before we go any further.

Checking Account

A checking account will take centre stage when it comes to your business accounts. Profits from sales are deposited in here, wages are paid out of it, and expenses such as bills are taken out of it. You may have heard others talking about cash flow within their businesses and its importance. Well, this is where it all happens!

Merchant Account

If your company accepts payments by credit card, you’ll need to set up a merchant account.  This goes for those who deal with online payments and payments through third parties such as Paypal too! This is great for attracting more customers. After all, the more forms of payment you accept, the wider the audience you invite in!

Accounts Payable

Accounts payable are exactly what they sound like: a record of all of the money that your business owes out to others. This can include things like mortgages, company car payments and any other form of credit you may well have taken out. This is a purely informational account for the sake of keeping on top of your records.

Accounts Receivable

Accounts receivable are essentially the opposite of accounts payable: this is all of the money that others owe to your company. If you have extended credit or let out a loan to customers these amounts will be included in this category. Much like accounts payable, this is again a purely informational account for the sake of your records.

Payroll Accounts

If you have employees, you will need a payroll account. All worker’s wages are deposited into this account, ready to be distributed out to individual staff members’ bank accounts.

Personal

Your personal accounts solely deal with your own, personal income. Anything to do with business accounts or corporate accounts shouldn’t overlap here. This is your personal banking. Essentially, you will open up one of these accounts at a local bank branch. To work out which to choose, take a quick look here. Different banks and branches will have different strengths and benefits, so be sure to compare around the market before choosing one. They will have different interest rates on savings accounts, will offer you different overdrafts and some will have extra benefits if you take up their own branded credit cards. Your personal wages or salary will be deposited into it and you will use it to pay for personal expenses such as rent or mortgage payments, bills, food, and entertainment. Your personal tax will also be paid out of this account at the end of each tax year. Make sure not to go over your credit limits or agreed overdrafts, as this will result in you being given fines and receiving charges. Keep your statements too. Nowadays this is a little easier, as most banks encourage you to have online statements, which are cheaper for them and more environmentally friendly.

So, there you have it. The basics of business accounts and personal accounts. If you haven’t organized your own yet, it’s time to get on top of things. The sooner you take action, the better, as it helps you to get organized and avoid charges or further problems down the line.