The time has come when you have a profitable business and need to start thinking about taxes and accounting.
With your new company and working from home, you may not have access to the same resources as your larger corporation counterparts. Instead, you’ll need to rely on your accountants for help with bookkeeping and accounting for your startup.
Unless you’ve been living under a rock for the last decade, you’re likely aware of the prevalence of startups today. These companies are changing industries as we know them and there are now more startups than ever before. In fact, 77% of all new businesses fail within their first two years.
This means that while it is important to keep your vision small at first so that failure isn’t an option, it’s equally as important to expand your horizons if you want success in the long run.
What is Bookkeeping?
Bookkeeping is the process of tracking and recording financial transactions for your company.
Bookkeepers track expenses, income, and other financial activities and then prepare reports with this information.
The most common type of bookkeeping is accounting. This includes tracking revenue, expenses, payroll, inventory, and more. Another type is tax bookkeeping. This includes preparing tax returns and filing them with the IRS.
Why is Bookkeeping Important for Startups?
As a startup, you need to know how much you’re earning and where it’s all going. If you don’t track your company’s numbers, then it will be difficult for anyone else to do so.
Just because your business isn’t yet doing millions of dollars in sales doesn’t mean that bookkeeping isn’t important. Physical books are limited, but digital records are not. You can have perfect record-keeping without any physical books at all.
Bookkeeping is a shared responsibility between the owner and the accountant and both of these individuals need to know what is happening with the company from day to day.
How to Find the Right Bookkeeping Services
If you’re not sure how to find the right bookkeeping services, you can start by looking in your area. While this may seem like a tedious task, it is important to remember that finding the right solution could be the best decision you make for your business, for example LessAccounting.com offers a specific bookkeeping service for startups.
When looking for bookkeeping solutions, it is important to first assess what type of company you need. Some companies, like small businesses and startups, might require help with the more complicated aspects of bookkeeping such as payroll and accounts payable.
Other companies might have a smaller budget and therefore should focus on simpler tasks like tax filings, organize receipt, or bank reconciliations.
Additionally, some companies might not need any accounting or bookkeeping services at all and instead opt for other solutions such as consulting or outsourcing services.
Although these options do have their costs associated with them, they are often cost-effective in the long run when compared to hiring an accountant.
Can I Do My Own Bookkeeping for a Startup?
It’s always important to keep your vision small at first so that failure isn’t an option, but you also want to expand your horizons if you want success in the long run. One way to do this is to think about how you can be a part of a team at a startup instead of doing everything on your own.
As remarked by Allana Wass, Co-Founder at Comfybeddy “You may not be knowledgeable enough, or simply don’t have the time, energy, or patience for bookkeeping and accounting the way it should be done when starting out.”
The good news is that there are some ways that accountants can help startups. By partnering with a CPA or an accounting firm, startups can get assistance with everything from cash flow management to tax preparation and more.
This includes making sure that all necessary documentation for taxes and invoices is filed correctly as well as offering advice on how to create revenue streams and track expenses.
If you decide that you can’t handle the work on your own just yet, start small by outsourcing some tasks like filing taxes and invoicing for services rendered.
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