Accounting For New Businesses

Starting a business is an invigorating experience. Under a new idea and converting it into a viable proposition is exciting as well as demanding. Development of marketing strategy and selling to the first potential customer contains enough  highs and lows to fill your experience bank for a decade. If this is not very exciting and challenging we would not be doing it, would we? And, especially in the early days when we are often working long hours for almost nothing.

Probably the only thought that we give to money in the first is the amount we hope to make! However, the lack of attention to the details of corporate finance that trips up so many entrepreneurs. If money is not controlled, measured and accounted for accurately then even – perhaps most – growing companies hit the cash flow buffer long before they reach the point of being profitable. So if you do not take care over the boring financials and find a good accountant to help you, then your dreams may end up accounting for nothing.

So be sure to think about how to keep your financial records before you start. Ask for advice and establish a system that works in your business, both to enable the VAT returns and annual accounts to be prepared as well as to ensure you can keep a check on the numbers – who owes you money, who need paying and how much profit you are making. It is almost always a mistake to leave this until the business has been trading for a while. We are talking about ensuring that important information is regularly available to talk, so why not have it from the start, particularly as it will cost you more to sort out the mess later on.

If a business is small and likely to remain so then you may be able to run it on the spreadsheet. But beware of just creating on yourself. Any accountant will tell you horror stories of spreadsheets that have been deeply flawed and often dangerously so. If you are going to use aspreadsheet then make sure it has been thoroughly and accurate in what it reports. If it is only a list of entries with no categorization then it will be of limited or no value.

Accounting packages come in all sizes and cost but they all tend to do the same thing. In the end they have to be easy to use ( or you won’t ) and easily readable by whoever is completing your accounts. Make sure to test properly before purchase and receive a professional viewpoint on its suitability for your business. There are also many good online packages which are worth checking out.

Good, professional tax advice and accounting advice at the beginning of the business must be able to save money initially and set you on the right course with effective systems to provide you with the information you need to know exactly where your business is and to plan where it will go. Looking for a recommendation, please check with several people … but get an accountant! It is an obvious advantage when speak a comprehensible version of English not just an obscure accounting language. They must strive to offer solutions not just raise problems and must be interested in understanding your business.

So enjoy your new business, but make sure you are clear about how to count the numbers before you start.

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