Creating a startup is a dream for many! Any aspirant will put their heart and soul into making them to the level to create a startup breaking all their barriers in life. In fact, creating a startup is itself a great victory in one’s life, especially if you are from a weak economic background. However, from the market and business point of view, making the startup grow and expand with time is a real success. This is what makes sense to its establishment.
Being a budding business owner is a lot of responsibility to handle. You will have to be careful and conscious in every decision you make as it can easily affect your business growth. Also, you will have to single-handedly handle all departments of your business. Let us speak about one of the most important of those. It is accounting! Here are some of the key things you must know about accounting for a startup for the goodness of your business,
Open A Business Account
Please don’t hesitate to create a dedicated business bank account for your startup. It must not be in connection with your personal bank account to have clarity in business transactions. It is advisable to maintain a checking and separate savings account for your business so that you can use them for business transactions and saving your profits respectively. You can also consider having a business credit for easy purchasing.
Set Up A Bookkeeping System
You can either select cash basis or accrual accounting according to your preferences. Each has its own method and merits of accounting your money. Next, you must set up a bookkeeping system to easily track your daily transactions. You will have to purchase bookkeeping or accounting software and create a chart of accounts(COA) for this purpose. Followed by deciding on your terms and finalising a bookkeeping maintenance schedule. This will ease your life.
Financial Records
Here are some of the important financial records to be accurately maintained with the help of the system,
Cash Flow Statement
Cash flow statements are the clear record of money received and sent from your business. Please make sure your cash flow statement includes both fixed and variable expenses. This will make it very easy for you to analyse the movement of cash and cut down unnecessary expenses if any.
Profit & Loss Statement
The profit and loss statement which is also known as an income statement will obviously show your gains and losses in the business. This will help you summarise the revenue and expenditure of the company for a specific period of time. This will help you craft clear plans to inverse profits in the future.
Tax Returns
Tax returns are said to be maintaining accurate data of your tax paid to avoid income tax-related issues. Make sure you complete and file proper forms at the expected time frames.
Balance Sheet
The balance sheet is another important component to check regularly. This can be considered as a snapshot of the current financial status of your business. You can prepare a balance sheet whenever you wish to know the exact status. Make sure it includes liabilities, short-term and long-term assets, and equity.
Hence a small overview of what you should know as an investor in your own startup. This can be confusing at times as you are a beginner. Having strong support means a lot in this condition. Find the top chartered accountant near you for this purpose with the help of ThreeBestRatedⓇ, a growing business-listing website filled with best professionals in your locale. They can largely help you and reduce your burden making sure you don’t lose money and obey the rules of the business!
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