An accurate record of all the financial transactions – sales, purchases, payments, receipts. Payables and receivables in a detailed way are called bookkeeping. As dynamic as they tend to be, start-ups are not usually mindful of the cash flow and do not adequately record these transactions as the funders and personnel juggle through multiple tasks.
Though every entrepreneur starts with a basic financial footing and under structure, the dynamic nature and quick growth of a start-up increase the complexity of financial operations. DIY bookkeeping and multitasking with excel sheets and pulling and all-nighters may not be enough to put the books in order. This is exactly the point where most start-ups begin to lose track of their finances eventually losing control of o the cash flow and finances leading to derailment.
If you are an entrepreneur who is facing similar problems in your start then its time you build string bookkeeping foundation for your business. In this blog today with the inputs of remote bookkeeping experts at Outsourced Bookkeeping we provide you 6 bookkeeping tips that will help you to build a bookkeeping foundation for your start-up. Read on:
1. Separate business and personal expenses:Maintaining a clear distinction between personal and business is the first and foremost practice that must be adopted by early-stage start-ups. Though most start-ups keep a note of this segregation, the majority fail to accomplish it which soon slips through in the to-do list. Blending these two classes of expenses could trigger an IRS audit, makes tracking complex and ensure personal liability when the business is sued.
2. Accurately categorize and track your revenue and expenses: Accurate tracking of financial transactions is the foundation of booking and this begins with the right categorization. This accurate tracking is crucial for building financial statements and filing accurate tax returns. Though most business owners maintain excel sheets/spreadsheets to track these expenses it is recommended to make use of accounting software that simplifies the tracking and management. While you do so, we advise you to keep a special focus on business travel expenses, meals and entertainment expenses, home office expenses, gift receipts, expenses related to vehicles.
3. Choose the right accounting method:While tracking expense is crucial, choosing the right accounting methods also impacts the bookkeeping function. Because the timing of the transaction recording (income or expense) does impact how you make your financial decisions and go ahead with a budget, accounting methods become crucial too.
As transactions are recorded only when the cash exchange the hands, cash basis accounting may seem more straightforward. But accrual-based accounting offers a better financial picture and give a better idea of how well the business is running.
4. Understand your tax obligations and tax deductions: Either due to lack of expertise or lack of personnel, start-ups often ignore the tax obligation only to make last-minute runs during the tax period and thus end up making mistakes. Knowing the tax obligation and deductions will help you budget the expenses most profitably.
5. Schedule Bookkeeping Timings: One of the most common mistakes start-ups commit is to postpone the balancing act until the books are complicated and end up being a mess. While we understand start-up founders don many hats and are juggle multiple tasks, one must ensure balanced books without delay. The best method to avoid complicated books is to start early with your books and then set a regular and consistent time that is designated for bookkeeping.
6. Craft a Bookkeeping System That Works for Your Business: While the above tips are only common guidelines, finding the best practices for a business depend on the specific expense and revenues and cash flows streams. Crafting a customized bookkeeping system for your business helps business optimize their financial health while helping them grow seamlessly. However for this to happen, a start-up can seek help from remote accounting firms with expertise in bookkeeping services, like us at Outsourced Bookkeeping.
Build a Strong Financial Foundation – Start with Bookkeeping:
More than 90% fail in their first three years and lack of financial planning is found to be the most common reason for these start-ups to go under. Given they compete with well-established brands, it’s always an uphill battle that needs on-point financial accounting lack which can derail the business.
So building a strong financial foundation becomes a key for any entrepreneur who aims to build a robust start-up that sails smoothly and grows comfortable with time. And accurate and effective bookkeeping is where one can lay the first stone. And there are two ways to pave a strong foundation with accurate and efficient bookkeeping – hiring an expert bookkeeper or outsourcing bookkeeping functions to remote accounting firms with experts in remote bookkeeping services.
Outsourced Bookkeeping – Best Remote Bookkeeping Services for Startup Businesses:
Though hiring a dedicated bookkeeper does help, it comes with the additional responsibility of managing one; not to mention the costs associated with hiring a dedicated resource. If you are looking to leverage expert bookkeeping services that free up your time, save money and enable you to focus on your core business, then remote bookkeeping services is the best choice.
As one of the most trusted remote accounting firms in the business, Outsourced Bookkeeping specializes in bookkeeping services for all types of business across versatile industries for more than a decade now. If you are an entrepreneur looking to leverage bookkeeping services that will provide you with a financial edge then you can contact Outsourced Bookkeeping here: https://outsourcedbookeeping.com/