Startups that receive funding and are spending money on advertising, product development and employees need to keep a close eye on their cash flow. A single lapse in proper accounting can lead to money wasted, money not accounted for properly, and hefty fines come tax season.
The right accounting firm helps startups find success and avoid crashing and burning by:
1. Determining What Works and What Doesn’t
Startups need to know what works and what doesn’t work. Your business is made up of several areas, and the only thing that can tell you exactly what’s working and what’s not is the numbers. The right accountant will be able to tell you:
- What operations are making money
- Which revenue streams are too costly
- Which advertising vehicles are providing the best ROI
When you have a professional breaking down the numbers for you, it becomes much easier to refocus your efforts and know what works and what doesn’t work.
2. Decision Evaluation
An accountant provides businesses with the cold hard facts about their operations. Many businesses will make decisions based on their “gut,” but when the numbers are involved, the accountant can help you make sense of decisions.
The right accountant will help you determine:
- Decision viability
- Decision risks
- Execution strategies
Startups need a clear plan and vision to be able to grow. If your plan and decisions aren’t aligned for growth, this can lead to bad business decisions that are unclear and lose money. Accountants provide an entirely new perspective on business and the decisions that can lead to success or failure.
3. Save You Money
When a business is just starting, it’s common to sit on Accounting Coach, YouTube and the like to gain a better understanding of how to control your books. You may even learn how to properly do your taxes and control your cash flow.
Knowledge is power in business.
But you’re not an accounting professional (well, most of you aren’t). The laws and tax codes change often, and you have to become well-versed in state and federal tax laws, which can be very difficult to do.
Accountants are here to help you save money in a multitude of ways, such as:
- Locate and take advantage of tax breaks
- Reduce unnecessary fees and penalties from inaccurate tax assessments
- Save time on being your own accountant
Accountants simply know more about the tax codes than you do. No matter what software you’re using, there’s a good chance that the software is not able to meet the same level of efficiency as a human helping you plug away at your numbers.
You don’t even need to have an accountant as a full time employee or come work with you on a weekly basis.
Accountants may only be needed a few times a year to ensure that your business’s operations are running smoothly.
4. Accountants Help During the Initial Start-up Process
A lot of startups will hire an accountant during the initial stages of their business. This is done because accountants offer a wealth of information and help to small businesses, including:
- Proper business structure for your business
- Business plan formation
- Financial analysis
- Recommendations for accounting software to use
- Information on how to comply with government requirements and regulations
- Advice on how to properly track expenses
Your accountant can come help you when you’re first starting your business to make sure that you don’t make routine mistakes that can cost you a lot of money in the long-term. Once started, accountants can help with everything from payroll to the business growth stage.
And when your taxes get complex, an accountant will act as a form of protection against a dreaded audit, which every business hates.