As you’re starting your own business, it’s easy to get so caught up in the minutiae of day-to-day operations that you don’t focus on the bigger picture, which could affect your business’s success or failure in the long run. As an entrepreneur who has gone through all of the trials and tribulations, we want to share some accounting tips we wish we had known at the start of our careers as small business owners. Learn from our mistakes and avoid them!
1) Choose the Right Accountant
One of the most important steps to starting your business is choosing a good accountant. Use these tips to choose an accountant that will help you with your taxes and other accounting needs.
2) Focus on Cash Flow
When you’re first starting out, your biggest concern should be on ensuring cash flow is met. By keeping a close eye on how much money is coming in vs. going out, you can avoid getting into a financial bind that could spell disaster for your start up and leave you with bigger issues than just accounting. This also goes back to planning and foresight, which are crucial to small business success.
3) Do Not Worry About Growing Too Fast
A lot of entrepreneurs come from start-up experience, so they are used to seeing their companies grow quickly. They assume that it is better to grow fast than slow. When in reality, you want to grow at a steady rate because that will increase your chances of success and reduce risk. It takes time to plan and execute your business plan, so don’t worry about growing too fast while you do it.
4) Know How Much Money Your Business Makes
How much money you make is directly related to how well you manage your finances. You can’t run a business without knowing how much money it makes or spends—the same goes for your personal financial situation. Knowing where every penny goes will help you understand what areas of your finances need improvement, and with that knowledge, you can work towards a better tomorrow.
5) Look at Past Years’ Financial Reports
Whether you’re an established company or a start-up, there’s no reason to reinvent accounting. Chances are that other companies in your industry have already figured out what works and what doesn’t—so don’t be afraid to borrow some ideas from them. Just make sure you know who was responsible for specific tactics in these companies so you can account (pun intended) for their effects on your own business.