What Is Startup Accounting?
Essentially, startup accounting is the financial record keeping for your new business that allows you to track any financial trends that may indicate opportunities to modify, grow, or scale back any of your business spending.
To do this effectively, you either need to hire an experienced outsourced accounting firm that can manage and organize your company’s ledgers, track expenses and risks, and identify opportunities for growth or you need to purchase and utilize accounting software that you can use to do your accounting in house.
Read on as we explain the basics of startup accounting and new business bookkeeping.
Why Is Startup Accounting Important for New Businesses?
The bottom line of your new business is too important a factor in your success to overlook appropriate accounting practices. By hiring a seasoned professional or using software that can keep your finances organized, you will set your business up for success and growth.
Effective startup accounting practices allow companies to see the “big picture” when it comes to their company’s overall financial health, track the company’s accounts payable and accounts receivable, manage contracts, and organize the day-to-day financial tasks of daily operations.
How Does Bookkeeping Help a New Business?
Few things will be as critical to the success of a new business as organized accounting and bookkeeping departments. Without them, it would be nearly impossible for a business to run smoothly and continue to grow.
Your finances and how they are managed should be a well thought out part of your business plan. This will ensure that you are carefully tracking all of your budgets, revenue, contracts, and expenses.
Make sure you either hire an experienced accounting form, or that you have a decent grasp on the following basics of managing your financials.
Transaction Analysis
Each business transaction that is made should be recorded to the appropriate account ledger so that it can be easily recalled if needed and can be categorized to track specific types of expenditures or income.
Journals
Accounting journals are used to record each transaction that your company makes each day with receipts, invoices, and orders. This will serve as a chronological record of how your company’s money is moving through your business.
Ledger Accounts
Ledger accounts are simply a group of accounts that are lumped together in a similar category. This is a simplified way to keep track of various categories of income, expenses, and accounts.
Trial Balances
A trial balance is a simple way to make sure that all of your income and expenses are in sync. This is something that should be done regularly to keep an eye on any potential discrepancies or errors.
Bank Statement Reconciliation
Each month, your bookkeeping department should be reconciling your company’s bank statement to ensure that there are no discrepancies or any questions as to where cash flow is going. This practice allows you to monitor any trends with your monthly cash flow.
Closing Out Inactive Accounts
When you conclude all business with a client, it’s a good idea to purge the active client from your ledger to keep your books clean and streamlined.
District Advisory Can Help You Get Your Startup on Track
District Advisory is the top accounting service in the DC Metro area. Our team of experienced outsourced accounting professionals are here to help you organize your accounting department and make sure your company is on track. We can help your small business streamline your accounting services. Call us to schedule a free consultation at 929-822-6366 or message us by clicking here.
