29 Mar How to Approach Bookkeeping and Accounting as A Startup
So, you’ve decided to start a business. Congratulations! Before you get too far, you’ll need to figure out how to keep track of your financials. Creating a bookkeeping and accounting plan early will help you make informed business decisions, mitigate the risk of overspending, and generally be a happier person (really).
This quick guide will show you how to approach bookkeeping and accounting as a startup from the beginning so you can stay organized as your business grows.
Figuring it Out – Starting the Journey
First, talk to a professional as early as possible. Warming up a relationship with a accountant/bookkeeper is a good way to ensure you have a coach, consultant, professional on your side at each turn. Yes, Google is a decent consultant however your business will have nuances and a human professional is still the best way to ensure your steps are heading in the right direction.
You do not have to commit to having your books maintained by an outside person; on the contrary, you should be as involved in the initial bits as much as possible. However, when you are stuck it is good to have help nearby.
At this point, you do not need a lot of bells and whistles with your accounting. Having a good start is ensuring you have the basics covered. Try and do the bookkeeping yourself for the first few months under the guidance of a professional. Doing the books yourself can help you get familiar with your company’s numbers to understand what things should look like.
The goal of this phase is to get on the right track from the start and to get familiar with your companies financial record keeping. This isn’t just about being persnickety. You can save a lot of money by having things done the right way the first time when it comes to accounting. Clean up costs are quite expensive and those that spend a few hundred for professional guidance end up avoiding these issues. Having a professional on hand will save you not only from the anxiety of not keeping an accurate set of books, but also on possible tax penalties and of course the extra time that will be needed by a bookkeeper later on down the road.
At this point you will want to discern what you want out of your bookkeeping. Most folks know that filing accurate taxes is an important reason to have good bookkeeping. But to think that is all there is to it will be leaving a great deal of value sitting on the table. Analyzing financial information is not just for trading securities. As a business owner there can be no more important managerial responsibility than to monitor the financial performance of your company. A good bookkeeping program will allow you to get timely, accurate, and actionable information on your business.
Does your company need to carry inventory? If so, how much? With a dedicated bookkeeper you can very accurately see how much you have on hand, forecast sales, and ensure you are not overspending on goods that you may need immediately need. How about a company engaging in project-based work? Do you know how much budget you have left for each project? Are you hitting the margins that you expected? Again, a bookkeeper can track the revenues and expenses by project very easily. There are many more examples such as monitoring the payments due to your vendors and the payments you are owed and following up with collections when necessary. The idea here is to start to identify what you will need as you grow.
You do not have to move on everything at this point. You can prioritize and take it one step at a time. But knowing what you want out of this function for your business will ensure you can lay the groundwork to make the implementation of new accounting functions efficient. cost effective, and timely.
I’m Too Busy for This – Growing Phase
By now, your business is up and running. Customers are flooding in, and you’re getting busier by the second. Time is money, and you don’t have a lot of it to spare. Even coding a small number of transactions can quickly become a chore, especially if you are inconsistent with reporting.
Besides having less time during this period, your bookkeeping responsibilities will become more complex as your business expands and encounters new challenges. This leaves you with less time to research answers and more opportunities to make mistakes if you continue handling bookkeeping on your own.
In this middle phase there will be rapid changes to most of the company and accounting and bookkeeping will be no exception. Do not let your eyes off this part of the business. This is after all is how you can accurately assess cash flow (the life blood of the company) among the other important metrics that define business success. Most companies stumble and fall on financial matters and losing track of this part of the business will ensure you are working at an elevated risk of having the same fate.
If you are having a tough time keeping up at this stage, you are 100% normal. The important thing is problem recognition and solution development. But you likely already know this if you are at this point.
Hopefully, you have established a relationship with a bookkeeper already, so you can turn things over to them as soon as you start feeling overwhelmed. If not, give us a call, and we can help you get started.
Bookkeeping Adulthood – Steady Operations Phase (But Still Growing of Course)
After a period of sustained business growth, you should have transitioned most, if not all, of your bookkeeping tasks off your desk by now. You are likely thinking about taking on finance professionals to assist with the strategy and direction of the company. A director or CFO can help with assessing business goals and establish what resources are needed to get there. If financing or investment is desired this role will play an important role for you.
If you started your journey with a business professional that has this background you are fortunate, and likely did need to read this blog post at all. However, if your leadership team is lacking this function you may want to look at onboarding it at this time. You have spent a great deal to take your business this far, and now that you have resources it is good to get a financial business consultant to ensure you are making the most of the time and money you spend on the company.
I am a fan of the proverb “If you want to go fast go alone, but if you want to go far go with others”. Make sure you are rounding out the accounting team, because they can ensure you have a path to keep on.
Peach BPO Can Help Your Startup Succeed
Feeling stuck when it comes to bookkeeping and accounting for your startup? We can help! Contact Peach BPO today to learn more about our services and get set up with a professional who can help you with all of your bookkeeping and accounting needs.
Contact us to get started on setting up your team with PeachBPO!
About Michael Howard
Prior to founding PeachBPO, Michael (or Mike) worked as a business leader in finance and analytics for 14 years. Michael started his career as an economist for the North American cement industry and has since worked as a marketing, strategy, and pricing consultant, FP&A director and most recently the CFO of an international tech start up closely partnered with Google. Michael, attended Loyola University Chicago for his Bachelor of Business Administration and Northwestern as a graduate student in Predictive Analytics.