While entrepreneurs have many skills which they put to good use when setting up in business it can be easy to focus on the product, sales and marketing and overlook setting up the basic structure properly.
One of the areas entrepreneurs often attempt to cut costs when they first start up is accounting. They try to do the finances themselves thinking it will be simple, and it may well be in the early days.
However to give your business the best start in life and the best chance to grow and be profitable then it’s important to get the finances right from the very beginning. Understanding finance is not a skill which every entrepreneur has but it’s one which every business needs.
Burying your head in the sand and putting the books aside to do “on a rainy day” will be of no use to your business if you don’t have the financial knowledge to make sure you are correctly recording everything you need to.
For this post we asked the team behind Crunch to give us their top account advice for business owners. Here’s what they have to say:
Hiring an accountant
The first advice for entrepreneurs is to hire an accountant. No matter how good you might be with the numbers an accountant can prove their value in many ways, not to mention freeing up your precious time to focus on running the business.
A good accountant will have knowledge and experience which they can share with you throughout your entrepreneur journey, including advice on taxes and other financial specialist areas.
Accountants can spot patterns in your finances pointing to areas where you are spending too much and can identify potential problems with your money before it’s too late to resolve it. They can also help you through financial difficulties with expert advice.
They can keep you updated on any changes to legislation and can offer advice on issues such as payroll as your business starts to grow. A good accountant is not just someone who does your tax return; it’s someone who plays a vital role in the business growth.
Learn about business finance
Being an entrepreneur is all about learning new skills and having some financial knowledge so that you know what your accountant is talking about and can act on their advice, is really important.
While you will be relying on them to work for you, you should also make sure you make the most of their knowledge by learning from them so that you can understand their reports and know about your business cash flow and profit and loss levels.
Choose the right accounting system
When you first start out it’s important to keep the right records so make sure you have plans in place for an accounting system. If your accountant has one of their own that makes life easier but you still need a way to keep track of things like receipts, invoices and expenses before you hand them over to the accountant.
There are many online accounting systems now which make life easier for new entrepreneurs to record and keep track of finances so look at these as an option, particularly for a small business in the early stages, with simple accounts.
Ultimately an accounting system is only as valid as the information you put into it so you still need to make a commitment to work regularly on your books and accounts to make sure they are up-to-date and recorded correctly.
It may be that you opt for a simple manual spreadsheet to help keep records – as long as you choose a system that works for you and allows your books to be kept accurately so you can pass them on to your accountant, that’s the most important thing.
Hire a book keeper
Some businesses prefer to hire a book keeper to keep all the records for them and then only use an accountant at the end of the year to file the tax returns. It’s really about what suits your business and how confident, or not, you are in dealing with the financial side of the business.
As an entrepreneur there is already so much to take on and learn that dealing with all the financial recording is really one more headache that is actually the simplest to pass on to the professionals.
Whether you opt to do the books yourself and them pass them to an accountant, or use a book keeper to do that side for you, it’s important that you know your business finances are accurate, up-to-date and that all legal and tax requirements are being handled and met.
Rather than trying to do everything yourself, the best accounting advice is to hand over the accounts and all financial recording to a professional accountant to give your business the best possible start and to free up your time to be the entrepreneur.