Planning to start a new start-up business? Make things easier on yourself by paying attention to these four vital accounting tips to help grow your business and avoid problems.
Open a Bank Account
One of the big early mistakes many entrepreneurs make is to mix personal and business expenses. Doing so makes it harder to track the company's real financial progress, reap tax benefits and prepare documents for loans or potential investors.
Fix this problem by opening a basic business checking account with the smallest fees you can find. Then make a regular habit of paying for any and all business expenses using the business account. If you must contribute money to the business, do so using a proper deposit and writing business checks rather than just handing over personal money for business purchases.
Track Expenses from the Start
In the early days of any new business, money will flow out quickly as you purchase assets, sign contracts, hire employees and court potential clients. For this reason, it's important to start tracking all expenses as soon as possible before they get lost or forgotten. Work with any employees or partners to make sure they understand the importance of keeping records of all outgoing money as well.
Hire an Accountant
A start-up business may seem too small to justify hiring an actual accountant at the beginning, but doing so may save time, money and headaches later. Meeting with a professional can help you
Ask others in your specific industry for recommendations of an industry-experienced accountant for the best insider tips and suggestions.
Use Accounting Software
When consulting with your accountant, discuss how you plan to keep your books. Most start-ups can be run from a notebook and ledger books at the beginning, but you're likely to quickly outgrow this method.
A better way to use your time is to start with basic accounting software right from the start, thus avoiding the need to backtrack or recreate earlier transactions in the computer once you've outgrown pen-and-paper methods.
It may require a little more time and diligence to set things up correctly for your start-up, but take the time to do it right. Once your business gets running and then growing, the last thing you will want to do (or have the time to do) is to retrace your steps to fix problems you could have solved earlier. For assistance, talk to a professional like J H Williams And Co LLP.
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