Starting a business is not easy as one has to take care of everything their own from setting up the business to hiring people to attracting customers for their business. Accounting is one of the major factors that must be given priority when starting a business. After all it is the way that you can make sure that your business is profitable or not. It is stated that 30% of new businesses fail due to lack of cash. Therefore, whether you are an accountant or not it is important to have solid grasp of fundamentals of business accounting.
Let’s have a look on few quick tips which help your startup company.
- Separate your personal and company expenses.
This is very important as it will help you to identify your business and personal expenses separately. Always remember that your business is a separate entity and it is an accounting fundamental. Open a business bank account as soon as you decide to go through with your startup, and get a separate business credit card. This not only separates your accounts, but also helps your business build its own credit rating.
- Setup banking
Always try to avoid using cash in your business as it will be hard to track your expenses. When you use a bank account you will be able to get a bank statement at the end of each month and it helps to identify your transactions. As mentioned in the first tip, make a separate bank account for your business and hence you can identify your revenues and expenses well.
- Track your expenses
Always make sure to keep receipts in your expenses and try to scan these documents or make a copy for your backup. This will help you to have a proper bookkeeping. This is very important to have accurate accounts in your business and otherwise your accounts can be misleading.
- Use of cloud-based applications
As a startup business you might not have a lot of resources or people in your company. Therefor it is important to have some flexibility in the company and one way of doing that is managing a cloud-based application to store your information. Using a cloud-based application allows you to access any information at any given time and you can keep your receipts of income and expenses in secure place. You will not have the risk of misplacing the documents or any hard drive failure. In these applications you can store any document and it will help to have an accurate and proper filing system. You may use google drive, I-cloud or dropbox and it will save your time and helps you in making informative decisions.
- Develop a bookkeeping system
Bookkeeping is essential for any business and it is advised to use a proper system for that. Now you have many accounting software which makes it easy to have a proper and effective bookkeeping system. Accounting software like quickbooks, xero, zoho, tally is both affordable and user friendly that will make your accounting smoothly done. Always determine how you will get paid and make your payments and understand your vat obligation as a business. Calculate your gross margins and net profit to identify the future of your business and always have proper financial statements in your business.