Start-ups are an integral part of a vibrant economy. They contribute significantly (disproportionate to their size) towards new idea creation, new technology and exciting products and services. Since Start-ups work in an environment of low Buy Verified Binance Accounts and limited funding (generally), all their focus is geared towards the core activities of a business. This could be either sales or marketing or research and development.
Support functions like accounting, IT, and HR are usually make-shift arrangements or ignored completely. However accounting is one function that can be ignored at one’s own peril. Good Accounting is the means to a greater end- informed decision making and better controls. Information gleaned from a good set of books can give valuable insights into- how assets can be utilized, how sales can be analyzed and how expenses can be managed and inventory be streamlined better.
For example, an accounting system of an equipment manufacturing company that generates revenue trends for different income streams can lead to useful insights like service revenues are growing faster(though on a smaller base). Similarly, it can probably also show that service revenues are far more profitable than product sales. Hence the company can work towards selling more service contracts (and subsidize the equipment sales). Accounting system can give you more information that just how much money your firm makes!
Given the importance of accounting systems in decision making, its’ important that an entrepreneur always works towards establishing better accounting systems in his/her company , right from the early days.
I have listed below the five guidelines for start-up accounting:
1. Buy for the near-future rather than the present
Choose an accounting package that can not only meet your immediate needs but also handle the expected growth in near future. I have seen many companies use a basic version of accounting software, only to spend much more money doing a tedious migration to a larger software after some-time.
Thumb-rule- buy a accounting software which is one version higher than the version that just meets your current needs.
2. See your accounting costs as an investment, not as an expense
Most start-ups use a semi-qualified internal member or an over-worked part-time bookkeeper to keep their books. The perceived simplicity of popular accounting software further owners use semi-qualified bookkeeping help. These strategies can back-fire frequently and substantially! I have handled many such assignments where the expenses are all messed up and entered in hundreds of different accounts, assets are booked as expenses and owner’s personal expenses are mixed with business expenses. The effort and costs of this post-mortem correction is substantially greater then the time taken to create a new set of books.