When it comes to running a business, one of the most important things is to keep your business’s finances at all times. This makes sense as the primary goal of many businesses is to generate income and earn a profit. Regularly checking and maintaining the financial health of your company is imperative. This is where proper accounting processes come into the picture.
Big companies and well-established small businesses typically have robust accounting systems set in place. They may even have hired professional accountants or dealt with a third-party accounting firm in the process. However, this may not be the case with a business that is just starting. Chances are that you are confronted with some accounting problems that you may want to rise above.
In this article, we will share four common accounting problems faced by business startups and how to survive financial struggles:
Handling cash flow
Cash flow can be the greatest challenge that a startup business will encounter during the first few months. It can be quite hard to manage what’s coming in and out of your business funds.
For the most part, keep in mind that it takes about six months to two years for companies to see profits in their business. So, there’s no other way than to be patient while carefully handling your financial cash flow and watching it grow over time. An Accountant provides the information you need to better manage your finances.
There’s a tendency for small businesses to mix personal and business bank accounts during the initial operating stages. While this is a common problem committed by startups, combining financial accounts can be problematic in the long run because you can mix up your funds and miss out on tax deductions.
As soon as your business kicks off, find a way to separate accounts for every area of your finances, and never mix your personal and business accounts. If your business does get audited, the mixing of your financial accounts could quickly become a nightmare.
Tax is such a complicated subject of business conversation, especially for a startup business. The problem with tax planning and management is that there is no one-size-fits-all formula that businesses can follow. Tax needs and obligations vary from one company to another. For this reason, it’s best to hire tax consultancy agencies or online accounting firms that can help you handle your taxes.
Dealing with invoices
Handling invoices entails drafting payment information in detail and asking for payments from your customers, which is why it can be a tedious task. At the same time, you will have to deal with all the account receivables to make sure you’re being paid. Fortunately, there are online accounting tools that you can resort to, or better yet, hire an online CPA firm instead.
If you would like to dive deeper into the benefits of working with a cloud-based accounting company, check out our blog that dives into the key problems solved by an online accounting firm
Accounting is paramount for any business, no matter the size. As a business startup, however, you may be faced with common accounting problems such as handling cash flow, mixing accounts, tax planning, and dealing with invoices.
If you aren’t an expert in business accounting, it will be best to hire an online accountant for your business. You have the option to either choose an online accounting firm or directly hire an accountant. Either way, your hired professional will manage your business finances and help your startup grow overtime!
In need of small business bookkeeping services for your startup? Leave your financial hassle and stress behind and depend on our online accounting firm in Halifax! Get in touch with us today to see how we can help!