Handling the hard and fast numbers of your business is one of the most important parts of running your business in a successful and efficient manner, which is why many businesses turn to companies like Eide Bailly for help. Business owners watch out-it’s very easy to get caught up in the more creative and practical tasks of getting your business off the ground than it is to choose how to handle the numbers. However, this is one of the benefits of forming a company in the UK, being able to reap all the benefits of the work you solely put in.
Besides, figures get confusing and are not the first priority when you’ve got interested customers to handle. Here are things you need to know about accounting, so your startup gets and stays solvent.
- Hire A Pro
We know that starting a business is a very expensive and risky venture. You want to go ahead and hire a professional accountant (unless, of course, you are one yourself or are just very good with numbers). An accountant is the better choice for you if you plan on growing your business, or if your business structure is complex (such as an LLC). If you plan on adding employees to your payroll, an accountant really makes sense.
However, if you’re a one-person show, an accountant can be too expensive. In this case, a bookkeeper can be preferable. These professionals get you started with a good, organized record keeping system, handle financial transactions, and produce statements for you that are easy to understand and make it easy when taxes come due.
It may be tempting to cut costs due to being a smaller startup and keeping true to the entrepreneurial spirit, but you don’t want to run the risk of making too many errors, some of which can be fatal to your business. You might even consider using a freelancer to get things done or investing in some good accounting software as an alternative.
- Understand the Importance of Tracking Your Numbers
Another great tip is to understand that a third of small businesses fail because they didn’t pay attention to the finances, says small business blog TheBalance. As a matter of fact, one of the main reasons that small businesses fail is due to lack of planning. Many of these are related to financial reasons, so be sure to consider the following:
- Am I ready in case my business is successful or grows?
- Is there a market for the product I am to sell?
- Is my money sorted out before I start this business?
Another aspect of making sure you know where your money is going is holding clients accountable. Seeing a large amount of money in your receivables part of the worksheet is amazing, but it doesn’t count until it goes into the bank account. Don’t let your clients slide on making payments on time. Be strong in your stance and politely demand that payment be made for past orders before you send them any more of your goods and services. This department is critical in keeping your company solvent, so consider updating your billing/invoicing software if it is not serving you in the best way possible.
- Plan and Budget
Keep track of your everyday expenses that you rack up within your company. Instead of calculating your expenses every two weeks or weekly for payroll, put your focus on every day or even every week. This lets you see where finances stand, and how much you will need to set aside for the budget in the coming weeks.
Also, be sure that you calculate your minimum monthly profit. Create an accurate method of calculating expenses and regular obligations so that you have a clear idea of how much income you have to be making at minimum for each month. Income can be the simplest thing to calculate, so establish a strict goal to reach each month. Without direction, accounting becomes even more complicated.
- Expect the Big Stuff
You will need and want things like computer upgrades, new software versions, and may want to do your taxes with a reliable business accountant. These are big, expected expenses and should not come as a surprise, as they can be planned for. These often occur during the slow months, so plan for it while business is steady so that you don’t “feel the crunch” during slower times.
- Separate Your Accounts
Keep your business and personal accounts separated. Establish a dedicated business bank account and credit card. For that, you might have to do some research regarding various banks, which are good for small businesses. You may come across several financial institutions which can help you. But in that scenario, it becomes important for you to choose a bank that can offer you more features and benefits compared to others. For example, you can look for FLCBank (consider looking for the best banks for small business in florida online for contacting them) and similar financial institutions, who can offer simple and effortless services for managing your finances.
Remember that separating your bank accounts can help you in the long run. It will save your precious time when you are tallying up expenses. This is hard at first but will save you a lot of annoyances and head-scratching down the road. You will also want to keep your accounts receivable payments and borrowed funds separate, too. This helps you see what belongs to you and what needs to be paid back.
Accounting for startups is not without loads of details and plenty of questions from yourself and any employees you may take on. It is a rather boring job to track expenses, revenues, and costs, but taking those few moments to keep tabs on them will make your life a lot easier when it comes time for taxes, payroll and deductions. Stick with it and work it into your routine-you will be glad you did.