24 Mar Accounting Tips for Startups
Launching a startup needs lots of vigilance – from seeking the highest quality in services and products to ensuring client satisfaction and more. Though there are different aspects you need to look at, one area that requires even more attention is – accounting. No idea can help any business survive and grow if it doesn’t have a proper financial or accounting plan. Therefore, entrepreneurs must have a precise understanding of what small company accounting includes.
If you’re planning to start a business and have no idea about money management, then this post is definitely for you. Here, you will find several accounting tips for startups, which will provide answers to all your basic queries. So let’s get started.
What Does a Small Enterprise Accounting Involve?
Whether it is a small enterprise accounting or large business accounting, the core purpose of accounting is to keep track of all financial transactions. These proceedings involve all kinds of monetary exchanges, such as salary payments, operational spending, donations, bill payments, equipment purchases, and so on. The outcome is the creation of the financial history of a company that can be utilized in different ways, like to attract investments or forecast sales.
Small enterprise accounting functions can be separated into two primary forms:
1) Managerial Accounting
2) Financial Accounting
While both kinds of accounting functions depend on the same data stream, the significant difference relies on their time focus and orientation. Now, let’s discuss both accounting types in detail.
1) Managerial Accounting
Managerial accounting focuses on internal strategy making and is used for future planning. Accountants or bookkeepers browse the past financial information and the latest available data to make assumptions about ongoing trends. Not only this, but they also forecast what these trends could mean to the future of the company.
The presuppositions can be related to sales expectations, operational expenses, product pricing, department performance, etc. After proper analysis, these findings or details are then shared with decision-makers who strategize and plan to establish a secure, profitable future for the business.
2) Financial Accounting
Financial accounting is entirely different from managerial accounting. In this, accountants use the past financial information of the business to identify the present value of a firm. These findings are then used by investors to determine whether or not the business is worth investing in. They are also analyzed by lenders and banks to decide if it is safe and secure to lend money to the company. These findings further used by government agencies to evaluate possible tax deductions and tax bills.
From the above details, it is clear that managerial accounting records are designed for internal sharing, whereas financial accounting records are used for external sharing. Therefore, businesses must be quite cautious when establishing financial accounting records as they need to be accurate and precise. These records should also meet general accepting standards to ignore any legal complications.
Should You Hire Two Separate Accountants to Optimize Your Accounting Operations?
The above discussion lead to another essential startup question, i.e., do you need two different accountants to manage your managerial and financial accounting functions? In this section, we will shed light on this topic.
While there are several professional accountants out there in the market, as a startup, you do not really require to hire two accountants to optimize your managerial as well as financial accounting operations. It doesn’t make any economic sense to do so.
Also, as a startup, your present company functions are not evolved enough to merit two different appointments at the moment. Therefore, recruiting a general accountant is the best way to follow.
However, with the time, as your small business matures and grows, you can consider hiring two separate expert or specialized accountants to handle your financial accounting as well as managerial accounting functions separately.
Overall, the accounting information mentioned above is something you need to focus on the most to make your startup thrive in the industry.
Choose the Best Accounting Software Solutions For Your Startup
If you’re looking for fully managed cloud-hosted applications and solutions for your startup, choosing Cloud 9 Hosting can be your right decision. They offer trustable hosting services for two of the most demanding small enterprise accounting software, which are QuickBooks (QB) and SAGE.
The QuickBooks cloud hosting services enable startup owners to deploy accounting solutions at minimal expenditure and enjoy the supreme advantages of cloud computing and automation. We help you bring your essential business and accounting applications into the cloud or web so you can boost brand productivity and financial functions.
With Cloud 9 Hosting, you do not have to worry about speed and security. We are committed to providing you with the best QB hosting experience possible.
If you want to know more about our web hosting services and pricing, it is recommended to browse our website or talk to us by filling out the contact form here.