Accounting Tips Every Startup Need to Know - What to Know
Updated: Dec 12, 2019
A new business requires vigilance—from making sure customer satisfaction is achieved to seeking the highest quality of services and products available in the market. Accounting is, by far, one of the most important factors to put your focus on when starting and operating a business. The company’s financial health is one aspect that needs more attention. Remember, even with great marketing ideas, the business will not stay afloat if the cash flow is dry.
Why is Accounting Important in Running a Startup?
Running a successful business is based on the bottom line. Your startup’s success is based on effective budget management, balancing the books, and enhancing financial strategies, when necessary. Efficient accounting practices and good financial management will yield a higher return on investments for both stakeholders and business owners.
Here are some advantages of accounting for startups:
Accounting allows the business to study previous records and history and determine their current status to better plan for the future.
It can let business owners and stakeholders see at a glance how they are performing financially.
It allows startups to keep track and monitor debts and receivables for services rendered or goods produced.
Financial accounting is used by startups to communicate information externally to organizations and people that use the financial data of a certain company such as the ATO, banks, creditors, suppliers, leasing companies, and future investors.
Startups may also use financial accounting information to study competitors and assess business opportunities
Accounting can also be used to share and evaluate the company’s weaknesses and strengths with employees
Basic Accounting Tips for Startups
When starting on a new business venture, you must decide on how you are going to manage your financial records. Most of the reasons startups fail are by believing that they can handle everything on their own.
Here are some accounting tips to help get your startup on track:
Use Smart Accounting Software
Checking your account online every day and blindly writing checks is not a clever way to manage your personal finances. It’s even a lot worse for startup businesses. To make good financial choices for your business, both in the short and long run, you need to have good control of your financial standing. You can hire a great accountant or bookkeeper, or you can invest in a comprehensive, intuitive, and accurate accounting software to help you monitor your financial standings. Use a cloud-based accounting software so that you can monitor your finances wherever you are.
Give Payment Incentives
Boost your products and services to allow for a discount for customers who pay early, opt to a subscription plan, or set up an automatic withdrawal. When consumers feel that they re getting more for the value of their money, they will increase what they are willing to spend. It will also help to boost customer loyalty when they know that they are being rewarded for their continued patronage and use of your products or services.
Consider Financial Assistance Over Suffering
Seeking financial assistance to save your business is not a sign of weakness—it is actually considered as a smart move. Avoid any possibilities of a startup burnout that is associated with raising a lot of money in the fastest time possible.
Don't miss out on paying salaries to your employees just because you don't have enough cash on hand. Do not skip any opportunities for business growth because you want to raise enough money first. Look for smart financing options—from banks to crowdfunding—so you do not have to wait for any incoming cash and risk losing your business.
There is a lot to keep an eye for, especially for startups. Financial health is important to keep the business running and growing. Use smart accounting strategies and get help from experts to help you navigate through the early days of your business.
If you’re looking for an accountant for your business in Australia, get in touch with New Wave Accounting to see how we can help!