When you own a growing start-up business, it can sometimes be difficult to stay on top of areas like accounting and bookkeeping. Most new business owners are heavily involved in the operational aspects of the business, so accounting and bookkeeping can often become a low priority. Unfortunately, this usually leads to getting behind and having to commit more of your time catching up. Being complacent with your accounting can also put your business at risk in other ways. Keeping your books up to date is a great way to keep track of your business’ progression and can give an early warning of any potential issues.
As they grow, many businesses opt to use externally employed bookkeepers and accountants to oversee the finances, regulations and compliance of the business. This is often the preferred option because of the time constraints of business owners. But initially, you may need to do this yourself. Work with your accountant to put together a plan for your business and accounting needs. In the meantime, here are some tips for getting your start-up accounting and bookkeeping organised:
- Make sure your account records and record-keeping are under control from the outset. Getting behind and having to do historical bookkeeping is often far more complicated and time-consuming than it would have been to just keep up with it regularly. Make an early decision on whether you’ll do this yourself, employ an external bookkeeper or appoint the task to a current employee within the business.
- Use accounting software. Better yet, use cloud accounting software. Cloud accounting works in much the same way as traditional accounting software, but it offers far more perks, particularly in the current climate. You cloud accounting software can be used from almost any device, not just the one PC in the office where the software is installed. It can be accessed by anyone with a unique login from anywhere in the world (with an internet connection). This means that regardless of where you are working, your accounting can be updated in real-time and you can share this information with anyone in the business.
- Consider VAT registration and agree with your accountant which VAT scheme to use. If your startup deals mainly with businesses it may make sense to register for VAT early. Most businesses only need to register when their sales go above the VAT threshold of £85,000. If most of your work is business to business the chances are your customers will be VAT registered and therefore your being registered will make no difference to them. However you will now be able to reclaim VAT on expenditure generating increased profits. Also check out with your accountant which VAT scheme will be best for you. For most small businesses cash accounting or using the flat rate scheme will either save money, improve cashflow or result in simplified book-keeping.
- Be organised with your information! Work with your accountant to establish the information your accounting system needs to capture. The more accurate your information is, the more efficient your accounting system will be. Your accountant will ask you to consider things like whether your business will have stock to account for, whether you will need to track accounts receivable from clients and whether your business will need to comply with government regulations or reporting.