Accounting For Startups

The key reasons for the failure of many startups are because they are not focusing much on money and financial matters. Ignoring basic finance and accounting would be insignificant to many but they are the strongest parameters that put off the business from its course to become a successful entity.

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If you are starting up a business for the first time, then you need to adopt the below-mentioned accounting basics to make sure that you are able to maintain minimum accounting decorum.

Accounting basics to follow

Open a bank account- The first and foremost thing you should do is to open a current account in company’s name.  Most of the people, fund their capital using the savings from their bank account. But you need to have a separate account as it would be easier for you to keep track of all the transactions.  All the payments and expenses should be routed through this account as it offers financial transparency from the beginning.

Develop appropriate mechanism in book-keeping- Book-Keeping mechanism means maintaining the details of all financial transactions happening on daily basis. You need to decide whether you should outsource the process of book-keeping or you can do it yourself. The decision should be based on the team at hand and the quantum of finances.

Track each and every expense- Usually, all the major expenses gets accounted. But many startups ignore the small expenses. One should take into account all the company expenses and everything should be tracked.

Track the taxes- Accounting does not mean you just need to maintain the transactions records. But you should also periodically track the taxation obligations too. You need to be aware of the applicable taxes for your business and the payment of tax should be done before the periodic deadline.

Adopt the right accounting system- You can either go for cash method of accounting or accrual method.  Finalize the accounting system according to the business needs and maintain consistency in the system.