When you’re running a startup, it’s easy to get wrapped up in the dreams and visions of your idea. You’ve built a product or service and enjoy seeing it built from the ground up as it grows from concept to business. But there are some not-so-fun aspects or running a business, like accounting, that shouldn’t be ignored. After all, money mismanagement is one of the biggest reasons why half of all new companies will fail within five years.
There are many reasons why accounting is such an important sector for businesses. Accountants can help you navigate business licensing, expense tracking, policies and procedures, and much more. Accountants can also give you a much more realistic overview of what you’re dealing with from a financial point of view.
You’ll know whether you’re being overly optimistic about your budget, and where you can afford to spend a few extra dollars. Instead of worrying about whether your books are balanced, you’ll be able to focus on building your user base or putting together a powerful pitch deck.
Here are a few tips for spearheading your startup’s accounting efforts:
As a founder, you find yourself involved in many aspects of the business. But when it comes to accounting, it’s best to just hand over the keys and let go of the steering wheel. If accounting isn’t your wheelhouse of talents, don’t try to get involved.
Not only will it take more time and energy, but you may come across as a micromanager, which hurts other people’s ability to be productive and damages company culture. Even if you tout yourself as a jack-of-all-trades, this isn’t an excellent area to influence.
Accounting is clear-cut and straightforward, and it’s best to let the professionals do what they do best. As a business owner, you’ve got a million things to manage—accounting shouldn’t be one of them. With that in mind, it’s also essential that you give them unlimited access to your accounts.
To make important decisions, accountants need to know everything about your accounts and need the passwords to any technology and journal entry accounting software you use. Transparency is key when it comes to building strong relationships with your accounting or firm.
If you want to support the startup culture, why not work with another startup? Accounting tech startups have sprouted left and right, and are raising millions from investors. Some of these newly sprouted businesses focus exclusively on SMEs and startups and give business owners a more versatile set of options when it comes to choosing an accounting firm. These accounting startups are built around automation, leveraging new technology, and disrupting the market to accommodate smaller companies that don’t have “big accounting firm” budgets.
Depending on your situation, smaller firms may be better for your budget as well. For example, many traditional, large firms operate on a timesheet payscale, while newer companies have subscription models that are a bit more budget-friendly and predictable.
When it comes to financial records, the general rule of thumb is to keep receipts for everything. This high level of documentation will help you in the long run and allow you to get the most tax credits. If a receipt you’ve kept isn’t useful, your accountant will make that assessment.
If anything needs to change (such as if you’re consistently keeping receipts for something you don’t need to), your accountant will let you know. This means maintaining a record for years to come—not just for the current tax period. To avoid paper pileup, use a digital scanner to keep a digital ledger or your receipts in the cloud.
Of course, you can’t just become an accountant overnight. And you wouldn’t want to—unless accounting is a skill you need to have in order to do your job, chances are you don’t need to invest an entirely separate education into it. However, taking a crash course will provide you with a basic understanding, allowing you to feel more comfortable when it comes to accounting speak.
Basic bookkeeping knowledge is useful for comprehending the fundamentals—even if you’ve got someone else taking care of your accounting needs, it’s a good feeling when you understand the jargon and can wrap your head around what’s happening financially with your business.
If you are interested in even more business-related articles and information from us here at Bit Rebels, then we have a lot to choose from.
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