Business is an exciting thing. You get to do what you like and manage it the way you want to. You own your time and your schedule, and you have full control over your vision and the projects that you want to unfold. It’s certainly very exciting to be your own business! But it is also really hard work. In addition to all the aforementioned, you also have to manage your finances, keep up to date on accounting, and basically do all the leg work such as keeping up with taxes with the BIR.
If you want to successfully grow your startup, it is imperative that you know how to manage your finances with proper accounting and bookkeeping. If you do not already, well, then it is time to learn. Noteworthy, most startup companies that fail or file for bankruptcy early in their days do so because of poor financial management resulting in poor business decisions and losses.
Thus, a good and solid work ethic surrounding your financial and accounting process will give you the footing you need to launch your company to success. Though the financial aspect of business can be quite difficult to master, it is essential. The first step to getting a better grasp on your finances is to first assess if there are any issues. With that said, these are the accounting roadblocks that startup companies usually encounter.
Laying the Financial Foundation
The hardest part for most startups is setting a good financial foundation. This means proper business planning, costing, and what have you. While in the early stages of the company it is easy to get caught in the vision, which can result in poor project implementation. Thus, from the onset, it is important to acknowledge your financial limitations. If you are not familiar with finance in general, it may help you to seek professional help from mentors or outsource financial services like accounting. This usually comes at quite a sum, but it is worth every peso that you stand to lose without proper financial systems in place. After all, professionals are there to guide you and help you keep the profits you earn, while helping your make sound projections for the future.
Tracking Transactions and Financial Data
All year-end accounting books reflect all the transactions made throughout the fiscal year. Most companies that struggle with this have a hard time updating their journals. Remember you must log transactions in when they happen. You cannot be remiss in this because the longer you wait till you compile receipts and invoices, the more mistakes can happen. Negligence can leave you with erroneous books of account. You may miscalculate or forget to list transactions altogether. Doing so will affect your accounting as what is reflected on the papers may not be the same as what is actually in your possession. Timely track down everything! From debts, to payroll, to utilities bills, listing transactions on time and as they occur will help you keep everything in order.
Starting with Right Plans in Place
One of the things that hold people back from starting their business is fear. That’s why it’s very common to hear people raving about how you should just “take the plunge.” While that can be pretty good advice, you also have to be, even slightly, prepared. You cannot take the leap of faith without a plan. Many startups with poor financial planning fail to even break even. Therefore, business planning and costing are essential. You must first see how much it is you will have to shell out so you can set your prices accordingly. If anything, you do not even want to break even. Your pricing and cost management have to be set so that you can make a profit. After all, that’s why you’re engaged in business.
Complying with Quarterly and Annual Taxes
Many startup companies have trouble with taxes. This is not unusual, especially in the case of owners who have been used to living as employees. With a business, the tax filing processes are different, and the laws are different. Additionally, you become in charge of filing the withholding taxes of your employees and paying their benefits. These are important points for considering when setting your company budget as well as your product and services prices. Many companies overlook these things when they are starting out.
Preparing and Building for Growth
Startups are exciting! New ideas, fresh perspective, and a whole lot of energy are fueled into these projects. Starting a business is already a big feat, and especially if you sustain your business momentum. But, the first step is one of the hardest. Equally as hard is taking things to the next level! Many startups fail in the sense that they are not able to prepare for and sustain their growth. This can honestly be quite difficult to do since it is easy to feel safe and comfortable with things the way they are, but you can’t play small forever! Eventually, your business will have to adapt and grow over the years. Otherwise, your company runs the risk of getting left behind.
Don’t belong to the statistics of startups that fail within their first year of operations. With proper guidance from finance experts, you can ascertain that your business will grow. Call our team of CPAs to help you manage your books of accounts and taxes. The right team can make a difference in your company’s growth and expansion. Call us for a free 30-minute consultation.