Starting a business is not easy; first-time entrepreneurs have a lot to do, like setting up the place, recruiting staff, and—most importantly—ensuring that everything is running smoothly.
Entrepreneurs are not accountants; keeping a tab of the finances is a big challenge they often encounter. If you’re a first-time entrepreneur, or are working with one, here are some useful accounting tips to help you manage your business accounts.
1. Keep Business And Home Expenses Separate
Many entrepreneurs merge business and personal expenses as they think that managing one ‘common’ account would be easier than managing two separate accounts. However, doing such a thing will only create confusion down the road, when you may have to handle a lot more cash.
It might not be easy to resist using your business credit card for buying personal items, especially when your personal account is a little low on funds. All these things will only create a mess—a mess that’ll take a lot of time to clear. Don’t mix and use the accounts you use for your business and personal transactions.
2. Get Professional
Hiring an accountant might be a little expensive, but they can organise your business cash flow and help you file tax returns and save tax. They are well-versed with tax laws, and can give you useful accounting tips as well.
Consider investing in an accounting software to track revenue, expenses, vendors and employee lists, and invoice and receipts. Some even let you upload transaction sheets right from your bank account.
It’s absolutely worth investing in a reliable accounting software; just make sure you choose the right one.
3. Fix A Date With Your Accounts
No matter how much you hate accounting, learn to deal with the books on a regular basis. It’s your business, and you need to keep a tab of everything happening—most importantly, your transaction accounts. It’s best to check your accounts at EOD (End-Of-Day) everyday, but a weekly check-in might do as well.
Doing this will make you more organised, and you’ll gain insights into your own business. Also, you’ll be in a better position to talk—and hand over the right things—to your accountant.
4. Make Projections
Putting a number to the money you’ll make can help you in a lot of ways. Making financial projections can guide you along a proper growth path and encourage you to meet your targets. According to experts, entrepreneurs should project at least a year’s income, and forecast for a minimum of three years.
5. Don’t Ignore Labour
It’s surprising how often entrepreneurs seem to ignore labour costs. It’s not easy—you’ll need to consider various factors like overtime, incentives, and other odd expenses like throwing a Christmas party. Whether it’s just you or a large workforce, consider all the aspects of labour. Get a good picture of what is coming in, and what is going out.
With these tips, accounting is sure to become a little easier for startups and first-time entrepreneurs. A little focus and some effort is all you need to propel your business to success.