Accounting Tips for New Businesses

Starting a new business venture requires you to focus on many areas, from acquiring customers to generating revenue.

While those aspects are key to your business’ success, one area that always needs attention is financial health.

Here are some accounting tips for new businesses from the experts at Drumm Nevatt & Associates Chartered Accountants.

Build a solid accounting foundation

It is essential for startups to build a solid accounting foundation, as, without a sound understanding of the numbers, you will not survive.

Accounting will provide you with the most straightforward path to your business’ success and give an accurate picture of your financial health.

We recommend using a cloud based accounting solution such as Xero, and getting expert advice to ensure everything is setup correctly from the outset.

Keep a close eye on expenses

A common issue faced by many business owners while running a new startup is keeping a close eye on expenses. Simple expenses like office stationery, team coffees etc., can drain your bank account before you know it.

Use a business credit card

Use a business credit card to pay your expenses and link it with good accounting software to keep track of your spending.

Budgeting and forecasting your cashflow

How you manage your finances will play a significant role in the viability of your company. That’s why a cornerstone of any startup is having a budget and then sticking to it.

Starting a budget can be simple as creating a spending plan that considers both current and future income and expenses.

Having a budget keeps you on track when you are trying to achieve your business financial goals.

Know your tax obligations!

When you’re setting up your business, you need to determine your tax obligations to discover how your choices could impact you when taxes are due.

Understanding your business taxes can also help you take advantage of certain tax deductions, which can save you money.

Startups should use technology such as accounting software, as it can automate much of the recordkeeping process and maintain financial records. This makes it a lot easier to record the amount, time, place and business rationale of a transaction when you claim expenses as tax deductions.

Create a crisis money plan

2020 taught everyone the importance of having a plan for the unexpected.

Take the time now to create a crisis money plan.

Having three months operating expenses on hand can help you navigate the expected, but ideally, you need to be able to support yourself financially for at least six months without an income.