Like every other startup, you certainly have a lot of things on your plate to accomplish within a limited time.
When you’re working to help your product or service stand out in a crowded market, attract customers, and grow your business, it’s no wonder that accounting sometimes falls by the wayside.
However, neglecting your finances is a huge mistake, especially when you’re just starting. Below, we’ll discuss six tips for ensuring your accounting practices are on track and helping you achieve success.
Use a Cloud-Hosted Accounting Software
Using cloud-hosted accounting software, like QuickBooks cloud hosting software, can save you a lot of time and money.
By automating many of the tasks that come with bookkeeping, you’ll be able to spend more time on your business and less time on paperwork.
In addition, having everything in the cloud gives you (and your accountant) easy access to your financial information from anywhere.
Understand Taxation and Accounting Laws
As a startup, it’s important to be aware of the various taxation and accounting laws that will affect your business.
Working with an accountant who is well-versed in these laws can also help save you time and money down the road.
Choose an Efficient Accounting Method
The first step is to choose an accounting method that works for your business. The three most common methods are cash, accrual, and hybrid.
Cash accounting might be the best option if you have a service-based business or your products don’t have a long shelf life. This method records revenue when received and expenses when they’re paid.
Accrual accounting is good for businesses with products that have a long shelf life or are sold on credit because it records revenue when it’s earned and expenses when they’re incurred, even if the cash hasn’t changed hands yet.
Hybrid accounting is a mix of the two methods and can be useful for businesses that have both long- and short-lived products.
Keep Detailed Records
Another important accounting tip for startups is to keep detailed records of all their financial transactions. This will be useful at tax time and help you track your spending and see where your money is going.
You can keep records of personal expenses that you used to run some business errands so you can get some tax relief come tax time. Accounting software can make this task much easier and less time-consuming.
Plan for Major Investments
Large investment projects can make or break your business, depending on how you plan for them financially.
Since you have first-hand access to your business’s expenses and revenue reports, it’s easier to predict the best time to take on a big investment and when to slow things down.
You’ll also be able to forecast the amount of credit your business needs for the successful execution of the investment plan without significantly harming your financial reserves.
Maintain a Good Cash Flow
Poor cash flow management is a leading cause of startup failures. It’s prudent for any startup to keep a close eye on their cash flow and ensure that they’re bringing in more money than they’re spending.
This means always having enough money reserved to cover your expenses and pay your bills on time.
One way to do this is by invoicing your customers as soon as the work is done, rather than waiting until the end of the month or quarter.
This will help you avoid borrowing money or paying interest on credit cards.
Another way to maintain a good cash flow is by creating and sticking to a budget. A budget will help you keep track of your expenses and ensure that you’re not overspending.
It’s important to be realistic when creating a budget and allow for some flexibility.
As a growing business putting in place, these six accounting tips will help you be successful. If you need assistance, ensure you get the necessary help from professionals who have experience in this area.
______________________________________
Some other articles you might find of interest:
Would you like to better understand how to drive and increase traffic to your startup website?
How to Drive & Increase Traffic to Your Startup Website
Do you have what it takes to start and run an online business?
5 Key Skills You Must Have to Start & Run an Online Home Based Business
