As 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.
- 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.
- 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.
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.
- 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.