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Darcie Coy


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Plan for Bookkeeping in Your New Business

January 5, 2017 / by Darcie Coy posted in Santa Monica, Los Angeles

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darcie-coy-for-web.jpgEven if your business is profitable, it could still be at risk of failing unexpectedly if you don't track your money properly. And yet every day we see companies launched with little to no budget for professional bookkeeping services.

That's a formula for disaster.

You Don't Get What You Don't Pay For
The reason new businesses skimp on bookkeeping services is simple: They think they're saving money. But just as you can save more than you spend by hiring a professional to prepare your personal income tax returns, you can minimize the "loss" portion of your company's P&L — and maximize the profit — with the help of skilled bookkeepers.

Think about what you have estimated for revenue and make sure your budget for controllership and bookkeeping services is commensurate. If you expect to have a high cash flow, you want to plan for it and not rely on barebones or bootstrap bookkeeping.

Inadequate bookkeeping services can not only eat into your profits, but also lead to significant problems with the IRS. According to Franchise Business Review, "About one in three small businesses will face fines and penalties at some point in their operations due to mistakes, inaccuracies and other errors." And their recommendation for avoiding penalties due to inaccuracy is to hire a professional firm with the skills and experience necessary to handle your business' accounting needs.

Also keep this in mind: If you're crafting a business plan and seeking investors, being thrifty with your controllership and bookkeeping services won't impress them. It will scare them. They'll want to know their investment is well cared for.

Financial Planning Is a Big Part of Business Planning
Besides helping you keep track of your financials, an bookkeeping services company can help you analyze and interpret them, a key component in helping your business grow. You may also need help producing timely, accurate financial reports for investors on a regular recurring basis — usually monthly.

Your bookkeeper should take a holistic approach to your business, understanding not only its current state but also your goals for the future.

You need a bookkeeping services company that can scale with your growth, not stifle it. If you work with a company that has solid processes in place and a large team of qualified professionals, you can minimize the kinds of financial growing pains that can stunt your development.

For more information on this topic, read my blog post from November 2016: Smart Accounting for Start-Up Businesses.

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Legal and Tax Disclaimer
This website is created by Supporting Strategies to provide general bookkeeping and accounting information only. Supporting Strategies does not provide tax, legal or accounting advice, and the information contained herein is not intended to do so. As such, the information provided should not be used as a substitute for consultation with professional tax, legal and accounting advisors, and you should consult with a tax, legal or accounting professional before engaging in any transaction.

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Smart Accounting for Start-Up Businesses

November 4, 2016 / by Darcie Coy posted in Santa Monica, Los Angeles

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darcie-coy-for-web.jpgAs an accounting services professional, I love working with new start-ups. These entrepreneurs are ambitious, enthusiastic, and creative, but all too often I see them running into the same stumbling blocks when it comes to their accounting. Here are four tips for staying on top of accounting for your new or growing business.

  1. Make Time for Accounting
    Accounting is not your core business, but having good accounting practices can help your business be successful. It is worth your time to be involved. If you’ve hired accounting services professionals, meet with them on a routine basis, and make sure you understand the data they provide. If you’re handling your accounting on your own, I recommend using a top-notch cloud-based software such as QuickBooks Online.

  2. Pay Later, Get Paid Sooner
    The impulse to pay on time is, generally speaking, a good one. But many of the business owners I work with find themselves in a difficult position when they pay their invoices right away, while their own clients and customers have yet to pay them.

    According to Under30ceo.com, “With the invoices you need to pay, the rule of thumb is to delay them for as long as you can.” The goal is to collect payment from your clients as early as you can, while delaying payment on your invoices as long as you’re entitled to. Having cash on hand will help keep your business going.

  3. Forecast
    You don’t need to be a psychic to know where things are going for your business. A good forecast will help you stay ahead of the game, answering questions about long and short-term profitability, cash flow, and expenses.

    A business forecast is a look forward at how your business will expand and develop in the future, both short and long-term. Not only is a forecast a valuable resource to show to potential investors, but it will help you as well. Your forecast will take into account all of your expenses, and your expected revenues. It’s useful to consider different revenue amounts—looking at your best- and worst-case scenarios.  

    Forecasting will help you set out your goals clearly and make the kind of day-to-day decisions that will actually get you there. Check out Paul Audet’s blog post on how to create a great forecast

  4. Establish a Separate Business Bank Account

    They say that good fences make good neighbors. Putting up a “fence” between your business and your personal expenses is important for new entrepreneurs. This will make record keeping and filing for taxes an easier process. Set up a bank account for your business with its own credit card, and it will be easier to track your business expenses.

    Read more tips for entrepreneurs in Danielle Huffstetter’s blog: Three Things to Do When Starting your Own Business.

     

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