No small business startup dreams about number crunching. What fills their dreams is creating a new product, marketing, selling, their website, their customer service, and making money. An entrepreneur wants to start making money before they have to think about accounting and all that financial stuff.
But here’s the thing: accounting is a cascading function. If you don’t get this month right, there’ll be more to do next month. The problem will only grow. So to help you avoid mistakes you could make a startup when it comes to your accounting, below are some tips to save you time, headaches, and ultimately, money.
Accounting Mistakes Small Business Startups Can Avoid
Be Sure to Integrate--Accounting for your small business, just like marketing and product development, is an integral part of your business, not separate from it. Take this in to account right off the bat, before starting your business, just as you would all the other working parts.
Understand the Basics of Accounting--Whether you plan to do your own small business bookkeeping or hire a professional, it only makes good sense that a startup understand the basics of accounting, the terms, laws, taxes, etc. Knowledge is power, so at least take a free crash course online concerning Accounting 101.
Separate Business from Personal--Not only does this make good business sense, it also has a huge psychological component. You MUST separate your business finance and spending from your personal finance and spending. By having a separate account, you’re mentally separating yourself and the business, allowing you to make a more rational decision.
Not Hiring a Professional Accountant--If you’re not an accounting expert, then outsource it to a professional. First of all, it doesn’t cost that much. All you need is a bookkeeper to keep proper records in the beginning. If nothing else, the value you get from that service comes in the form of a tax return at the end of the financial year. Secondly, you don’t want to risk it. Unlike say, marketing, the laws that govern accounting related processes are not at all “obvious”. The last thing you want is get fined for ignorance.
Not Having Enough Backup Capital to Run Your Business--Nothing can put you off your game as quickly in business as knowing you don't have enough money backing you up. Sales may start out slow, or there could be emergencies, both with your business and family affairs. Make sure before you launch your startup that you have done your research, have a business plan, and understand and obtain the kind of capital you need to give you peace of mind to concentrate on building, marketing, product development, and customer service. Bottom line, If you're desperate, it shows. And almost nothing can make a person more desperate than worrying about money.
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