Accounting for startups entails keeping strict (and accurate) financial records and detailed accounts to project the organization’s growth.
As a business owner, accounting is absolutely vital to discern what trajectory your business is on, so you know what you can afford. If you’re trying to do it yourself, it’s best to track all expenses at once. Take screenshots with your phone or document them using some other method. This comes in handy when you need to file taxes at the end of the year. Plus, with all the online software available to you, even if you’re not the best organizer, there’s many tools that’ll help you manage. Of course, a recommendation for all small business owners is to track your time. Many entrepreneurs starting out, focus their business on deliverables. They charge by the project rather than by the hour. When looking to acquire new clientele, deliverables are great because they don’t appear to be money pits… for the client. For you, the business owner, you may find that a project you’ve quoted someone for is suddenly taking much more of your time. The point is, track your time, and especially with mandatory, business function because there’s a good chance your time would be better spent growing your business while you outsource accounting to a CPA firm. There are many proficient accountants can help you with the task seamlessly. All that said, here’s a look at the merits of accounting:
You could use Excel, and no one would hold that against you, but you know, QuickBooks does exist. QuickBooks offers exemplary bookkeeping services which can make your accounting effortless. Huddleston Tax CPAs also has Certified QuickBooks ProAdvisors to help you and your team manage its service. Best of all, it’ll provide comprehensive financial reports to help you gain that 50,000 foot level overview (as well as the ability to dig down deeper).
With proper accounting, you can start to segment and effectively silo parts of your business with ease. This way, if you want to run an digital ad campaign, you can clearly see what you can afford to spend without hurting other parts of your business. Additionally, and this may go without saying, but if you’re looking to hire some new talent, you will know what kind of salary you can afford to pay them (factoring in healthcare, insurance, etc.).
Of course, one of the perks of breaking up your finances and budgets is you can also determine whether you have enough money to go on that dream vacation or not. Accounting will breakdown what you’ve spent, so you can stick to a budget, and not incur any overspending. A cost estimate is an ultimate solution to keep your business running.
Bookkeeping will give you the best figures you can use to predict your company’s status. You can know at a glance how much you’ll spend in the coming years at your current rate. For this reason, you can employ a suitable plan to make sure your venture thrives. Additionally, if you’re looking to sell, bookkeeping will give you insights into how you can improve your margins.
It is the crowning moment of any startup when you can determine how viable/sustainable your business. That is, are you yielding profits or not. Only through accurate accounting will you be able to get the details. The sources of revenue ought to generate sufficient money to match the firm’s needs. Hence, its assets should bring in more money to cater for all the costs. The facts are essential when you need to communicate with various financial institutions, investors, board members, banks, leasing companies, creditors and partners.
Develop the Company
One of the things that will help you grow your business is recognizing the strengths and weaknesses of your company. Especially if you’ve siloed business units, you should see which venues are making a profit, what are breaking even, and what is a loss.
Now, that said, this is where having an accountant for your startup might be absolutely necessary. While business units may perform internally in silos, it’s likely there’s cross-pollination between each department. So if you’re at a stage where advertising is pulling in more leads than social media and you’re looking to trim social media, you should consult with an accountant so they can monitor that change and evaluate as needed (not just at the end of the year). In that particular example, it could be that your social presence helps inform leads that you’re active, responsive and regularly updated so that even if social isn’t generating leads, it could be by proxy.
Use these records to improve the lagging aspects of the firm and double-down on areas where you’re gaining momentum. Plus, with the figures, you can benchmark your competitors. You will, therefore, determine the optimal strategies to employ to be abreast of your competition.
Satisfy the Enterprise Needs
Your business has current and upcoming needs that you need to satisfy in the long run. Financial accounting is the only way you’ll know if you’re on track to meet those expectations. Market trends can (and will fluctuate), changes in your industry’s landscape may occur. Startups are some of the few companies that exist in a flexible state. They can bend to the changing tides, consumers and technology.
Be flexible, be as accurate as you can be, and ensure your business thrives.