Each small business is different and the way finances are managed will vary in complexity and content accordingly. For some businesses financial management will not require activities related to employing others or input taxes. Other businesses will need to deal with some more difficult aspects of financial management.

Your task for this competency is to prepare several documents to illustrate your ability to manage finances. You can use your own business or one of the 'Example businesses'.

• Outline the records you are required to keep for your business. If you are already in business present a folio of example documents.
• Prepare a set of journals for your daily record keeping.
• Plan a filing system to be used for keeping record of financial transactions.
• Outline how you will monitor and assess your key performance indicators in your budget. It may be necessary to calculate some financial ratios to help in assessing your business' financial progress.
• Present a taxation plan.
  • What records do you need to keep?
  • What taxes do you need to pay?
  • Will you need to concern yourself with GST?
  • Will you be employing staff? Your plan will need to change accordingly.
  • Do you have an ABN? Do you need one?
• Develop a debtor policy.

Tips Explore the topics for information that will help you complete your plans. Try the activities for some practical experience in managing finances. Discuss your plans with other learners and compare different strategies to identify an approach that suits your business idea.