Essential Accounting Tips For Startup Success
Starting a new company is exciting. It’s also very tiring, and often budding entrepreneurs end up burnt out before making significant progress. One area that particularly deserves scrutiny is the financial health of the business. You can’t keep a company alive no matter how diligently you dedicated the time to other fields, if the cash dries up.
Therefore, if managing the finances is not one of your strengths, you can hire suitable accounting services in Singapore to handle your finances. But before you have them on board, these essential accounting tips for start-ups will get you going on the right path.
Delegate Accounting to Someone Else
You could be an experienced accountant already, however, starting your own business is an entirely new ball game. Start-ups demand not just your energy, expertise and time, you will also have invested a lot of emotion in the venture. Therefore, it would be unwise to expect yourself to handle both responsibilities of being the entrepreneur, and the financial manager.
Juggling between when to spend and when to save is often clouded with emotions and entrepreneurs often make wrong judgements if they are stretched thin between too many. It is better to outsource the day to day function to an accounting services in Singapore and let them give you information on the big picture. These firms have experts who can help you save money and alert you of potential financial issues.
Cash Flow Management is Critical
Cash flow management is crucial. Of the 80 per cent of start-ups that fail within their first three years of operation, more than two-thirds close shop because they’ve run out of money. This happens because their financial managers have no clue which channels generate income and which ones consume the majority of finances. Therefore, it would be an excellent place to start by knowing where every dollar comes from and how it is spent.
The best way to handle cash flow is to create a budget and stick to it. If you are struggling with how to establish one, you can visit the website of any accounting services in Singapore for tips.
Put a Cap on Fixed Assets Expenditure
During the early days of the start-up, wise cash management calls for you to keep your expenses – especially on fixed assets – low. Also, try not to be extravagant with your expenditure and be as frugal as reasonably possible.
High expenditure on fixed assets takes away cash from your day to day operations thus limiting your expansion. Instead, look at options such as leasing and partnerships. Cut your expenses and instead use that cash as capital for growth.
Make Accurate Records
Entrepreneurs often handle many transactions in a day, they make deposits, withdraw cash, receive payments and so on. With multiple transactions happening every day it is not a surprise to find mistakes such as erroneously marking deposits as income whereas they were direct cash injections. Such double entry accounting error would also hurt you on your tax bill as you’ll end up paying more in taxes. But you can avoid such errors by setting up a systematic method to make and check accurate records.
In conclusion, you’ve already made great strides by launching your start-up. The financial well-being of your enterprise is crucial to sustaining the business, and you can use these smart accounting tactics to navigate the business to success.