All businesses, even start-ups, have to put up with the chores of bookkeeping and maintaining accounts. This is something you should dedicate your time to just as you do for product development and marketing. Managing accounts properly is absolutely necessary for calculating the true value of your business, knowing profits, and also for tax and legal purposes. Most start-up owners are completely clueless on how to go about this crucial aspect of doing business. Here are several simple tips regarding managing accounts that your start-up should follow.
You Can Do Your Own Accounting
Some basic aspects, like calculating income and expenses, is something start-up owners can do on their own. Some basic accounting software can also help tiny companies to keep track of inventory, deposits and loans. You don’t have to hire an in-house accountant to do these basic bookkeeping tasks.
But Professional Help is Necessary
While the basics are easy enough if you know math, accounting gets tough when you have to file tax returns. There will be a lot of legalese involved, and you may not know how exactly to report cash flow. It’s not really possible to learn all the legal intricacies involved with filing taxes in a matter of days. This is where hiring a professional accounting service counts. You don’t have to enter into a full-time contract. You can hire a local accounting in Ormeau or similar service for a few hours or a few days per month at an affordable rate. The difference you make will be remarkable. The professional accountants will know how to file tax deductions in the way most advantageous for you. They will also be quick to point out any mistakes you make with your accounts. Plus, it’s a simple way to ensure that your books are kept up to date every month.
Don’t Forget the Labour Costs
Most start-ups neglect to calculate labour costs as business expenses. Even if you hire a freelance writer for a $5 article, that should be recorded as a labour cost. Don’t forget what you pay yourself, as that is an expense from business to your personal accounts. Keep track of yearly bonuses, overtime and any other benefits you pay. Knowing how much your business labour costs will help you adopt more efficient and cost effective practises later.
Not All Invoices Sent Gets Paid
Do follow up on invoices and receivables you send, mostly because not all gets paid on time. If there are third parties that owe you money, that amount does not have to go into your taxes as income until they pay. So, something as simple as keeping track of invoices will help you not pay more in taxes. Using accounting software or sending e-invoices will help you automate this process quite conveniently.
Don’t Mix Business Money with Personal Money
It may go without saying, but do make sure your personal money is not getting mixed up with your business expenses or income. Avoid paying for business items with personal credit or debit cards, no matter how convenient that might be.
The above tips will be good starter points for getting your business accounts well organized. As your start-up grows, you will have to hire professional business accountants.
Image Credit: Office