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You are either a startup, about to become one or simply checking us out to see if you have all your ducks in a row.
According to recent statistics, 50% of small businesses will fail in the first 4 years. That’s a huge number considering the many companies that are forming every day.
Don’t let this number discourage you. There are things you can do here and there to make sure you are not part of this statistic.
Wherever you are, it doesn’t matter if you fall under the category of new startups or seasoned business, you know that keeping track of your books cannot be ignored. So, why then, many startups forget that this thing we call bookkeeping for startups is a must?
First reason that comes to mind is because these CEOs are so focused on running their new business that they forget how important this task is. We speak with these types of business owners all day long.
Second reason is a lack of experience. The great American Writer Minna Antrim wrote this quote: “Experience is a great teacher, but she sends in terrific bills”.
Many business owners are not willing to spend the time and energy to learn why bookkeeping is beneficial for their business, and to gain the experience and knowledge needed to follow suit. It’s true, there’s a lot to learn, and time and energy are needed, but there are more pros than cons.
In this article, we want to highlight 3 things you should not ignore when it comes to subject of bookkeeping for startups.
Use a professional bookkeeper
Perhaps this is not really what you had in mind but allow us to explain. Unless you know what you are doing, there’s no reason for you to be handling your own books.
There are so many laws, and new rules that it’s almost impossible to know them. In 2018, the government introduced a new tax plan, we took a look at it and wrote an article about it.
Bottom line, as a new business owner, becoming familiar with the laws and regulations is not a waste of time, but not the most effective way to spend your time.
You should be focusing on running your business and let someone else track your business finances.
Think of your bookkeeper as the doctor of your business. When you go to the doctor’s office for a physical, your doctor will run a series of test on you. If need be, they’ll go as far as drawing blood. That’s a thorough doctor.
Your bookkeeper will do the same for the business. They’ll make sure to fully know and understand your business and make recommendations accordingly.
As a startup, perhaps you are worried about the money you’ll be spending on hiring a bookkeeper.It’s true that a bookkeeper would be considered a cost rather than a revenue component, but that’s a cost you should be okay with.
What would you rather? Doing your own books and pay penalties later or having a pro on your side to make sure that you and your business are doing great.
The choice is obvious. Today, with technology, you won’t even have to worry about hiring a bookkeeper at your physical location. You can hire virtual bookkeepers and work with them on an “as needed basis”.
As a startup, let’s say that you have decided to do your own books. Some startups that we’ve come across, are using their personal bank accounts to run their business.
This is where having a professional will prove to be very helpful. You should not be running your new business from a personal account. Having a business account will make it easier to track expenses that are for your business.
Bonus thought: A huge benefit to having a professional bookkeeper is when it’s time to file for your taxes. Hire a bookkeeper that is tax oriented. In that case you won’t have to look for someone else to file for your taxes.
In today’s world, starting a new business is a lot easier than it was 20 years ago. This is due in part with the technology that’s available. Technology makes it easier to be more efficient.
So as a startup how can you take advantage of this?
If you have employees, instead of running your own payroll, enlisting the help of a payroll company is definitely convenient. You would want to go with a company like Wagepoint to help with your payroll.
As mentioned above, hiring a professional bookkeeper is a good choice even if you are a startup. Today, again with the help of technology, bookkeeping has become very affordable.
Let’s take our company Akuracy for example. We are, first and foremost a startup, so we understand the startup mentality and what it takes to start and run a successful business.
Getting a bookkeeper doesn’t have to cost you an arm and a leg, which is why our services are not only geared towards helping startups but we’re very affordable.
Take a look at our services to see how we can help your business succeed.
If you have some measure of experience and don’t see the need to hire a bookkeeper, and you would rather take the DIY approach, that’s totally fine. But again, we want to reiterate that unless you know what you’re doing, there’s no need for you to handle your own books.
Use an accounting software for your startup. This will help you reconcile transactions and save receipts. Come tax time, you won’t have any issues to go back and print important reports that you need.
Download our free e-book: 5 accounting and bookkeeping strategies for business owners: to help keep the IRS of your back and grow your business.
Use Common Sense
“There is nothing more uncommon than common sense” Frank Lloyd Wright.
So, in business, having common sense is a must if you want to succeed in this competitive world.
For example, it’s good to set goals, but it’s not good when you set unrealistic goals.
If you have employees, it’s perfectly normal to have your expectations, but are you forgetting that you also were an employee at some point?
We all have our limits, are you aware that you have your own limits as well? Common sense will dictate whether you’re doing too much or not enough for your business.
Finally, if year after year you keep getting in trouble with the IRS because your books are not in order, deciding to get the help you need would be the right thing to do.
Bonus Thought: One of the common problem startups face today in terms of bookkeeping, is the fact that they put it off for later. The problem with that is you will not remember what happened with this or that two or three months ago.
When we sign up a client, more often than not, we’ll see that they need to use our catch-up bookkeeping service. We’ve put this service together to help clients that are falling behind catch-up in no time.
If you are falling behind on your books, common sense will tell you that it’s definitely time to have someone else take over.
Bookkeeping for startups as discussed in this article should be a priority. Just because you are a startup, doesn’t mean you get to neglect this important aspect of the business.
In addition to the things discussed there are other things a startup would need to consider like:
- What type of bookkeeping my business will need? Single Entry our Double Entry.
- Should I hire a CPA firm if I am a larger startup?
- Will I need to hire on staff bookkeepers to help my startup?
All these questions and more should be kept in mind. At the end of the day, make sure that you are always doing what’s right so that your startup can see many years of success.