3 Best Accounting Practices for Start Ups

Starting a business can be an exciting process where there is passion, energy and nerves. It’s also a balancing act as you’re the one in charge of everything, especially at the beginning.

The one thing that you need to manage right from the very start is your accounting and bookkeeping processes. Cash flow is the lifeblood of every business – regardless of industry. It is something that is easily put on the long finger when clients start knocking on your door.

Naturally, getting clients and customers is your priority, that’s why we have written this quick little note informing you of the three best practices that you should do when starting up your business.

1. Get yourself an accountant

It’s important to get yourself an accountant from the get-go. At the beginning, you are focused on getting revenue  and getting clients in. For some start-ups, accounting needs might be simple and there is the thought that perhaps you only need an accountant until the end of the financial year or the end of the tax year. But accountants can offer strategic and financial advice.

They can advise whether you should as a sole trader or a limited company; they’ll advise the pros and cons of each. They can recommend best financial practices for start-ups and assist you with all relevant tax registrations and Revenue compliance. They can teach you Key Performance Indicators (KPIs) so that you start your business on firm foundations. KPIs are a great and very informative way to measure your performance. Some KPIs to start with include:

  • Gross profit margin
  • Stock control
  • Debtor days
  • Credit days

These are KPIs which will help you identify cash flow issues and plan ahead with your business financially.

2. Make accounting a priority

Related to the point above, when starting out make accounting a priority. That will be the first piece of advice your accountant will share with you. It is so easy to let the receipts sit on a pile while you focus on marketing or staffing issues.

But you will find that running a start up, the time goes by in a New York moment. If you don’t get a handle on your income, operational expenses, payroll overheads and revenue returns, then it can become a slippery slope.

It is important to stay on top of your book-keeping to assess how your business is performing.

3. Buy accounting software

Accounting software does not replace an accountant. It can actually support your accountant as your books are up to date. Accounting software – whether desktop or cloud based – certainly makes your life easier. Using accounting software, you can

  • Invoice customers with professional invoices. Each software has templates that you can set up so you will always send invoices to include all the necessary required information.
  • Connect to your bank data files so your bank statements can be reconciled.
  • Manage your expenses. When posting your expenses they can be automatically logged and some systems allow expenses to be assigned to certain clients which are automatically added to the invoice.
  • See how healthy your business is. Each software package has a dashboard, allowing you to see at any one time how you are doing in terms of income, expenses, debtor days, creditor days.

We train our clients on Sage but we also use other market-leading packages. Just be aware that the one you choose to run your book-keeping from is accountant approved. Also check out the features so that it matches your business needs.

Starting a business is exciting. Keeping your accounting top of mind allows you to keep that excitement going, long after the start up date.

If you’d like to talk to us about anything in this article, please feel free to contact us. We can help keep your business in shape this year.

AG Associates is an accounting practice that specialises in affordable accounting and payroll solutions for the SME business owner. It also offers training on accounting software. For further information please contact Angela at Unit 11, Eastgate Way, Little Island, Cork. 021 4824723 or angela@agassociates.ie