If you’re looking forward to investing in the long-term success of your business, chances are you’re focusing on your product or service alone. You’re probably paying no attention to anything else surrounding it to ensure things go smoothly in the long run. However, selective attention is also a thing when it comes to running a startup. Everyone loves hearing success stories and also chasing them, pushing people to buy their products, but they end up forgetting about the important processes of accounting and bookkeeping. So we have shared three essential accounting tips for startups to follow.
In a world filled with startups, there is already a lot to worry about in terms of standing out from the pack. But without a solid accounting foundation, you may end up losing all of your profit and end up owing money instead of owning it. Startups typically make costly mistakes such as overlooking details in their books and ledgers, not being able to track the cash flow that stems from their operations. They might also forget about tax deadlines. Those mistakes can break a business before it ever gains traction.
Tips that every start-up needs to follow
However, if you’re going to play things smart as a start-up, you must pay attention to the details of your accounting system. That’s one of the right steps to overall success. Here are three more accounting tips for startups to keep in mind to manage your company’s accounts successfully:
Forecast your major expenses
One of the most important parts of running a start-up business is to determine which expenses are going to come up to help your business survive the ups and downs and counteract seasonal effects. By forecasting major expenses, you can protect your startup and ensure that it stays afloat even during the off-season without having to spend cash to keep things profitable. Major expenses, like high capital moves (e.g. software upgrades and multinational shipments), can make a huge difference in the success of your company, so it’s important to forecast them and make sure you’re on track.
Put money aside for your taxes
No business owner ever wants to pay taxes because they take a huge chunk from their profits, but it’s much better to be on the good side of the government so they won’t close you down for tax evasion. As early as the first accounting day of the year, you should keep track of when you need to pay your taxes, and ensure that the budget for them is ready a week or so before the deadline. Failing to pay on time can impact your business negatively. You can rack up immense dues that are double or triple what you’re supposed to pay, so do yourself a favour and pay your taxes on time.
Keep track of your business’ cash flow
The biggest mistake that startups make is that they fail to track where their cash goes and how it goes in and out, simply because there are no accurate or up-to-date records of their cash flow. Small costs that aren’t tracked can add up to a significant amount. Some costs are overestimated to the point that a company ends up paying more in the long run. In order to keep better track of your cash flow, it’s best to use a credit card to accurately track any expenses. Supplement this by tracking your income with up-to-date Excel sheets and different file versions for each day to make it easier to cross-reference.
More or less everything has to do with keeping your accounts on track. Whether its forecasting your major expenses or paying your taxes on time, keep a track of your business’ cash flow. As mentioned earlier, it’s important to keep track of your costs and make your decisions based on realistic situations. Because that’s what works out in the long run!