Startup business accounting can be particularly important since it’s likely that you’re operating your new business on a tight budget. But even if you’re lucky enough to have millions backing your business, your investors are going to want to know what you’re spending their money on.
Why you need accounting for your startup
With the nature of startups, there are often unknowns about how your startup is funded, how much money you’ll need and how much cash you can make. Inevitably, you’ll come to some cash flow hurdles — perhaps you have to tap into your existing investors for more money. Or you may have to find alternative ways to grow the business. But these unforeseen cash flow issues often mean you’re reliant on your accountant for help. In order to minimize the financial stress on you and your team, you need to understand how startup accounting works and what it means for your business. The most common accounting items you’ll need to keep track of for startups are revenue and expenses.
How to do accounting for your startup
The best way to approach startup accounting is with a holistic financial plan. This plan helps you understand where your money is coming from, how it’s being spent, and what it will cost you to sustain your company over time. Here are a few quick, practical tips to help get you started: 1. Assess Your Situation Figuring out how much money your business needs is the first step. Start by examining the “low-hanging fruit.” For instance, if your business will only operate one month out of the year, it’s not critical to track every purchase, and you can forgo expense reports for that month. Keep in mind that while having money in the bank is a plus, it doesn’t guarantee profits or even growth.
What accounting software should I use?
The number of accounting packages available for freelancers and small business owners continues to grow, but here are some of the most common. QuickBooks Self-Employed – Ideal for freelancers, team-workers and small business owners who want to keep track of their own income and expenses. – Ideal for freelancers, team-workers and small business owners who want to keep track of their own income and expenses. Quicken – Ideal for businesses with high turnover, as it gives you all the same benefits as a for-profit business. – Ideal for businesses with high turnover, as it gives you all the same benefits as a for-profit business. Xero – Ideal for small businesses that need an easy way to balance accounts without having to perform complex calculations.
The importance of accounting software
While your investors might want to know everything about your finances, most likely, you’re not going to want them to sit in your office hours on end trying to keep track of expenses. Luckily, modern accounting software allows you to record and categorize expenses simply and quickly. It also provides some useful reports and graphs that can be used by both you and your investors. A good accounting software also allows you to import bank statements and transaction data from your bank and other accounts to your spreadsheet. This data is so useful because it allows you to build your cash flow from your sales and your expenses, which is one of the most important aspects of building your business.
It’s simple: when starting your own business, the planning and preparation will make you a better entrepreneur. Don’t rush the process, and don’t stress out over your finances– you can still be successful by doing the right things upfront. “> Today, with the job market as competitive as it is, everyone has to be entrepreneurial at some point. Whether it’s your first gig or a business venture, keeping an eye on your finances is a smart move. Here are a few tips for keeping your startup business finances on track: Set Up A Business Account This might seem like an obvious step, but some people jump right into setting up a business bank account, without thinking about the consequences.