subject: New Business Accounting [print this page] Starting a business is an iexciting experience. Taking the raw idea and converting it into viable business proposition is envigorating as well as often immensely demanding. Working out a marketing strategy and selling to the first potential customers contains enough highs and lows to fill your experience bank for a decade. If it wasn't exciting and challenging we wouldn't be doing it, especially in the early days when we're often working long hours for next to nothing.
Probably the only thought we give to money at first is the amount we hope to make! Yet it's that lack of attention to the detail of the business finances that trips up so many entrepreneurs. If money isn't controlled, measured and accounted for then even - maybe especially - growing businesses hit the cash flow buffers long before they reach the point of being profitable. So, if you don't take care over the boring financials and find a good accountant to help you, then your dreams may end up accounting (pun intended) for nothing.
So make sure you think about how to keep your financial records before you start. Ask for advice and set up a system that works in your business, both to enable the VAT returns and annual accounts to be prepared as well as to ensure you can keep a check on the numbers - who owes you money, who needs paying and how much profit you are making. It's almost always a mistake to leave this until the business has started trading. We are talking about ensuring that crucial information is regularly available so why not have it from the start, particularly as it will cost you more to sort out the mess later on.
If the business is small and likely to remain so then you may be able to run it on a spreadsheet. But beware of just creating one yourself. Any accountant will tell you horror stories of spreadsheets that have been deeply flawed and seriously inaccurate. If you are going to use a spreadsheet then make sure it has been thoroughly tested and accurate in what it reports. If it's just a list of entries with no categorization then it will be of limited or no value.
Accounting packages come in all sizes and cost but they all tend to do the same thing. In the end they have to be easy to use or you won'tbother, and readable by whoever is completing your accounts. Make sure you try it out before you buy and get a professional viewpoint on its suitability for your business. There are plenty of good online packages too which are worth checking out.
Good, professional tax and accounting advice at the start of the business ought to be able to save you money initially and set you on the right course with effective systems to provide you with the information you need to know exactly where your business is and to plan where it is going. Find a recommendation, check out different suggestions ... but get an accountant! It is a distinct advantage if they speak a comprehensible version of English not just an obscure accounting language. They ought to be keen to suggest solutions not just raise problems and they must be interested in understanding your business.
So enjoy starting your new business, but make sure you are clear about how to count the numbers before you start.
