10 Essential Accounting tips for Startups

 Starting a business is exciting, and areas such as product development, fundraising, marketing, and so on consume the majority of any entrepreneur's attention, leaving accounting behind.

Going through endless financial documents will be dreadful if you are an entrepreneur who is not a numbers person. However, you should be aware that only accounting will provide you with a clear picture of your company's success and financial health.

Consider taking measured risks when working with accountants for startups. Starting a business is never simple, and we provide customised solutions to assist you in your growth. Our in-house startup accountants, who are equipped with the most up-to-date cloud-based solutions, are eager to collaborate with exciting new businesses and motivated entrepreneurs. Get in touch with one of our best Croydon startup accountants. Make certain that one is brought on board.

All the innovative ideas in the world will not keep a business afloat if the money runs out, so whether you like it or not, proper bookkeeping is critical to the success of any startup. Here are ten suggestions to help you stay on top of your startup's finances –

1. Understand the Law

The first and most important step you should take when attempting to manage the finances of your startup is to become familiar with the laws that apply to your industry. You will never learn good bookkeeping if you do not understand why it is so important.

You should be able to answer questions like –

• When do taxes have to be filed?
• What information do you need to keep track of your revenue and expenses?
• How long should invoice copies be kept?

It is preferable to be prepared than to be sorry during tax season.

2. Separate personal and business expenses

It is just as important to keep your business and personal lives separate as it is to keep your personal and business expenses separate. It is difficult to manage your startup's cash flow if you cannot see it separately.

If you haven't already, open a separate bank account for your business.

3. Keep a Close Eye on Expenses

The most common issue that any entrepreneur faces when running a new startup is keeping a close eye on expenses. Simple expenses like team lunches and office stationery can quickly drain your bank account.

Running a household with a carefree attitude toward tracking expenses is impossible, let alone running a business with the same attitude.

Pay for your expenses with a business credit card linked to good accounting software; this way, you won't have to sort through a bunch of receipts in your wallet.

Apart from making tracking easier, using a credit card allows you to earn rewards and points. Proper bookkeeping can help you save money by keeping careful track of your expenses.

4. Purchase Accounting Software that is Hosted in the Cloud.

Managing financial accounts is not for every entrepreneur. If you are not good with numbers, you should invest in good accounting software for your startup.

Though there are numerous options available on the market, cloud-hosted accounting software such as hosted QuickBooks is preferable due to the numerous benefits it provides, such as anywhere, anytime access, employee collaboration, robust data security, and automatic backup of your financial data.

Accounting software will allow you to connect your bank account. It will then track your income and expenses, assist you in sending and tracking invoices, and generate detailed reports about the startup's financial health.

Good accounting software will help you not only stay on top of your finances, but also improve the efficiency and productivity of your business.

5. Employ a Professional

With practise and a little education, you may be able to manage the financial accounts of your startup. Even so, as it grows, you will be unable to match the expertise of someone with a professional degree in accounting.

Hiring an accountant for a few hours per week or month can make a significant difference. He or she will assist you in filing your taxes correctly by informing you of any potential fees and saving money on deductions by finding loopholes.

He or she will be well-versed in the various IRS provisions and requirements, allowing you to save money and time.

You should hire an accountant who will one day serve as your trusted financial advisor. By reviewing your financials, he can provide expert advice on how to achieve your short- and long-term business goals.

Simply ensure that your accountant explains everything to you in a way that you understand.

6. Maintain Accurate Salary Records

Paying your employees will consume roughly 70% of your company's total budget. People in startups frequently work overtime and on holidays to meet tight deadlines, so it is critical that you pay them on time.

It can be time-consuming to manually track your employees' leaves and overtime. By connecting your accounting software to a biometric attendance system, you should be able to accurately track your employees' hours and salaries. Payroll taxes differ from income taxes, so your accountant can assist you in calculating them.

7. It's better to be safe than sorry.

"Hope for the best and prepare for the worst" is an old adage, but it's especially relevant for entrepreneurs when a bank study shows that poor cash flow management causes 82 percent of businesses to fail.

If your invoices are not paid until your loans are due, or if the work simply does not come up, you may run into cash problems. If you don't have any cash on hand, you might miss out on a great investment opportunity.

To avoid such problems, you should have enough savings to sustain your business for at least three months, preferably longer.

8. Effective Inventory Record Management

Thefts in the United States cost approximately $50 billion per year and can completely derail your bookkeeping. Even if you keep accurate track of purchase and selling dates, prices, and current stock numbers, you may avoid missing goods.

If you have a large inventory, you should automate this task by purchasing separate inventory management software, or your accounting software may assist you with this task.

9. Pursue Delinquent Payers

Clients who do not pay on time can have a negative impact on your cash flow management. Sending invoices as soon as the job is finished increases the likelihood of prompt payment.

In addition to sending invoices on time, make sure they are easy to read and offer multiple payment options. You can also maintain a bill discounting or incentive scheme that rewards clients who pay on time.

Your accountant or accounting software can assist you in establishing efficient invoice tracking that provides you with updates on the payment status of all your invoices. Send gentle reminders to customers whose invoices are past due, and inquire about the reason for the late payment.

If some of your clients are unable to pay on time, work out a payment plan that works for both of you.

10. Establish Future Objectives

If you want to see your startup become a billion-dollar company one day, you should set clear short- and long-term goals for your company. If you don't set measurable weekly, monthly, and quarterly goals, you'll veer off course and fail to accomplish much.

Financial forecasting can help you set short- and long-term goals by estimating your startup's growth for the next quarter or even the next two or three years. Calculating how your expenses (due to inflation) and client decisions will change can be difficult and should be done with the assistance of your accountant or accounting software.

Take a long vacation while best accountants in Gatwick handle your accounts correctly. If you live near the sea, make your way to Gatwick. And if you want some expert accountants to help you grow your business, come to our office. We possess all of the skills required of an accountant. They have it all, whether it's analytical skills or detail-oriented revenue generation. To name a few, consider critical thinking, interpersonal communication, adaptability, time management, industry knowledge, and spreadsheet proficiency. Yes, we have in-house accountants!