How Can Startups Set Up Bookkeeping
Even if you have superior accounting skills, the idea of setting up a bookkeeping system for your startup can still feel like a monstrous undertaking. But with a proper approach, the thought doesn’t have to loom like a mountain’s path.
With good organization and the right software, the process of getting started can flow more like rolling hills than impassable terrain. Like many other initial systems you set in place, they need to function efficiently down the line, carefully avoiding any potential accidents or obstacles in operations. The extra energy put into researching and implementing the best accounting framework from day one, can save untold time, money, and frustration in the future. With some great options in bookkeeping applications, it’s just a matter of being prepared with your current records and clear in your financial goals moving forward.
If you plan to stay small and don’t intend on expanding, then cash accounting is probably the best method. It allows you to record cash flow as it comes in and goes out, making your books simple and straightforward with minimal adjustments. For those companies seeking to launch themselves to higher realms, accrual accounting is the logical method as it allows for more flexibility to reflect what your bottom line actually is and then present more holistic data to potential investors. With accrual accounting income and expenses are recorded at the time of delivery rather than time of payment.
You’ll need to determine which bank to open a business account, as it’s much easier to track spending and profit if you have a separate account outside of your personal funds. When shopping for the right bank, consider fees charged, services offered, transaction limits, online and mobile capacity, physical locations, security, customer support, rewards, interest rates, and possible credit or lending options.
Now it’s time to see which software is appropriate. It is possible to do manual record keeping, but even a simple spreadsheet program like Excel will save endless hours of input and enable at-a-glance information that’s easy to see and read.
For more complex capabilities, Quickbooks is the most universally popular way to optimize your record keeping. Automatically integrate between accounts, track income and expenses, even generate invoices and reports to help project revenue or analyze the overall financial outlook of your company at any moment.
Be ready to receive your first buyers by having a payment system in place. Even a tool as simple as PayPal or Stripe will open you to digitally accept transfers for a small fee. For advanced processes like invoicing and receipts or international payments, then Recurly or Chargebee are designed for those services.
If you have employees, you’ll need a dependable payroll system. There are PEO’s and HR solutions that specialize in this, but for small startups, just be sure to cover your legal responsibilities. Ensure working status of staff, calculate payroll tax to be withheld, register for payroll tax in your state(s), and file employment tax forms.
Now you’re up, running, and keeping track. Remember to be consistent reconciling your bank statements with your company ledgers regularly, and avoid getting backlogged. Establish a habit of generating reports to maintain a clear vision of where you are fiscally in the present and how far you can expect to excel in the coming quarters.