When starting a new business, the field of accounting can seem downright frightening to most. Especially so for startups as they face challenges that make it more difficult to get off on the right foot. Starting our own business will undoubtedly give us a low of challenges and accounting is just one of them. Accounting is rarely someone’s passion but keeping the books organized is crucial for every business, no matter the size. It does work for us and provides benefits and insight into how our business is doing. It enables us to track our profits, expenses, and all other business transactions. Here are some of the most significant accounting challenges startups can expect to deal with.
1. Keeping track of things
Most businesses in their infancy phase are surprised by the influx of financial information. Debts, payrolls, operating expenses, and many more need to be juggled all at the same time. Keeping track of financial information and transactions allows us to optimize our cash flow, pay taxes diligently, and evaluate the business overall.
In today’s modern world any business would have to invest an accounting software. It will help keep track of all the important information and it leaves next to zero room for mistakes or oversight. Alternatively, these tasks can be completely delegated to a third-party service, which is a perfectly viable solution.
2. Raising finances
Acquiring finances to fund a business is probably the most important thing about this. It is also another very difficult hurdle for small business owners to overcome. This task can be accomplished by acquiring investors. But, since there are so many startups, competing for investors can be quite a challenge.
The most sure-fire way to make it is to build a solid business plan and have clear and concise financial records. These we can later show to potential investors and can be used as a gold bar to get their attention.
3. Managing payrolls
Payroll is unavoidable no matter if we are an international company or a startup. Every company has employees. Making sure that payroll is accurate is key to avoiding unexpected expenses, tax complications, and many other issues. It can be a challenge though. Again, it is another thing that can be handled in-house or outsourced to another specialized company.
4. Paying taxes
All legal businesses are required to file and pay taxes. The law surrounding it can get complicated, especially to running businesses. Requirements depend on many factors. Some might include the structure, income, and type of business.
For a startup, it is one of the most sensitive and delicate challenges as it can mean the difference between keeping our head above water or going under. Some can do it on their own with the staff that they already have. That is if they understand all the laws surrounding taxation.
And others choose to leave that responsibility to the professionals. Since the legislature is complicated and can change in a moment’s notice, delegating this operation makes sense. There are plenty of businesses that specialize in handling taxes like the popular LBB accountants.
5. Minding expenses
Keeping track of our receipts and regular expenses is a key part of accounting. It is also vital for any business to stay ahead in the ever-increasing market. Luckily, we no longer have to keep entire rooms dedicated to holding paper receipts.
Accounting software can help us in this aspect of accounting as well and keep our company paper-free. All pieces of software are different from one another and we need to find what suits our needs best.
6. Finance analysis
There are three steps to making a rational and calculated financial decision. We need to interpret, analyze, and advise. Generating the numbers is the first step and that is where accounting comes in.
That is why our foundation has to be solid so we can make further decisions with ease and certainty. Only then can we ask ourselves further questions. What do those numbers mean? Now that we know, how do we improve them? Careful analysis and interpretation are key to acquiring the best advice and making the best decisions.
It is a very important task for a startup or small business to select a proper accounting strategy. An experienced accountant or a dedicated company to delegate this task to, it all depends on our situation. Hiring one in-house can be costly. No matter what way we choose to go, getting a qualified professional at an early stage is paramount.