If you're preparing to start a new business for the first time, you may not realize just how many hats you're going to be wearing in the early startup phase of a company.
As a startup you’ll oversee marketing your business, perfecting your product, building relationships with customers and vendors and hiring the right team—and thats just to start with.
With so much on your plate, it’s understandable that you may struggle to stay on top of your finances. However, the long-term viability of your business depends largely on your ability to keep clean, updated books and engage in thorough financial planning. To that end, there are three major issues you must constantly address when it comes to business accounting.
Managing cash flow
Cash flow is the single-biggest challenge most small businesses and startups will face. When you’re just getting started, you might not have enough cash in the bank to be able to cover all your costs. Perhaps you have just transitioned from a standard job with regular wages, and now for the first time you must carefully monitor your expenses. Or, maybe you are having a difficult time getting your customers to pay on time. You could also have a difficult time keeping up with your expenses.
Whatever the challenges you face, it’s important to get your cash flow under control as quickly as possible. You cannot successfully and sustainably grow your business otherwise.
Planning for taxes
Many small business owners find tax planning to be a confusing and challenging process. This can be particularly true when you need to consider value-added tax (VAT)—a form of tax put on a product whenever value is added at a certain stage of production and upon the final sale. As a novice, you might be unaware of various methods and strategies you can use to help you reduce your tax obligations and qualify for deductions or tax credits.
Again, as a new entrepreneur, you likely do not have much experience with payroll processing. Figuring out how it works as you go can lead to some mistakes if you are not careful. You must consider not just how to use the software and tools that process payroll, but also the tax codes your employees fall under and exactly how you will pay them. These challenges will only increase as your business grows and adds more staff members.
You can address all these issues by working with a third-party accountant and financial consultant. These professionals allow you to get the reliable accounting and bookkeeping you need, without having to hire an expensive full-time employee. As a result, you can spend more time focusing on the other important areas of your business and set yourself up for much greater success in the long term.