Accounting is one of the most important aspects when starting a business. Regardless of how glamourous your logo is, or giving it a fancy name, without an understanding of the numbers your business will not survive.
Each year numerous businesses are run into the ground by business owners (or should we say former business owners) who only discovered too late that they were operating at a loss, and not a profit.
Methods of Accounting
There are generally two accounting methods: cash and accrual accounting. Some small businesses will have the option of choosing between both, while others are legally required to use the accrual method.
The accrual method displays your real-time financial situation, whilst most accounting software packages will simplify the process.
Hiring A Pro
Provided you don’t have a degree in accounting, you will most-likely need to employ the services of a professional to set up your accounting.
Each start up situation is unique, but generally most startups can get underway with a bookkeeper. This is fine for the average startups who don’t have the desire of building an empire.
An example of a reliable accountancy firm is LSA Systems. The Essex-based company provide both accounting software, such as Sage 200, and also provide complete business solutions to suit your needs.
This method will get you going with a good record keeping system, handle your financial transactions, and produce financial statements for you.
Alternatively, startups looking to grow big and quick will be looking towards hiring an accountant.
To begin with, you may start your business part-time or from home to keep your expenses to a minimum. Paying an accountant on a monthly basis can be expensive for startups and one-man businesses alike.
Preparing the books yourself or getting a bookkeeper involved in the process would be a way to save money, then only use an account for your year-end tax planning.
