[vc_row][vc_column][investment_title align=”left” tag=”h4″ title=”Accounting system set up” add_underline=”yes” style=”underline_small”]Your accounting data should not be a cause that hinders your business growth. It may occur if you do not take care of your accounting information in a proper manner. So, it is important to have an efficient Accounting system set up which can help the business organization maintain timely efficient data. Thereby, accounting system is a vital component of every business organization.
Having a good accounting system in place is essential in order for your business to grow to its fullest potential. With the aid of an effective accounting system, the business owner can estimate the amounts of profit that his/her company earns in a financial year, which is the prime concern of the organization.
To meet the ever-growing demands of the accounting system, 2Max Group provides best Accounting system set up that suit your specific requirements. The services of the firm do not end with the selection and installation of the system but also will guide you through all the necessary steps to operate and maintain a successful accounting system.
The services that we offer under Accounting system set up are listed below:
- Updates on pros and cons of latest accounting software in the market
- Installation service of accounting software for client’s businesses
- Data entry services
- Technical support/Trouble shoot
10 Essentials for Setting Up Your Accounting Function
1. Set up a simple accounting system. In the beginning, you just need a simple, low-cost accrual-based accounting structure. There are many light-weight options available, such as Mint or InDinero. While these aren’t true “accounting systems,” they are great for tracking expenses. More substantial are low-cost, easy-to-use systems such as Quickbooks, which 80% of our clients use. There are also high-end options available, of course. While these are great in many ways, honestly they are just too much effort and cost for an early-stage startup.
2. Set up your Chart of Accounts. I’ve addressed this in detail in a previous post, Creating Your Chart of Accounts for Your Startup. Suffice to say that at the core of whatever accounting system you use will be your chart of accounts (COA). It’s essentially an accounting system, designed specifically for your company, that aligns with your financial structure and helps you to track and report your income and expenses.
3. Open a business banking account. A business banking account with online component will help you to eliminate unnecessary manual processes and better manage your cash flow. Your bank account should automatically invoice your customers and help you to avoid cash shortfalls, by pulling in receivables and stretching out payables. Also, your account should seamlessly integrate with your accounting software.
4. Separate personal and business expenses. It seems obvious that you’d want to keep your business expenses distinct from your personal ones, but, as I wrote about in a previous article (7 Biggest Tax Mistakes Startups Make), it’s surprising how many entrepreneurs conflate the two. At best, this leads to confusion. At worst, you could be sued and forced to pay additional taxes. Your company could even be stripped of its corporate status. Avoid this by establishing corporate checking and savings accounts and maintaining a separate income statement and balance sheet. Use checks from your business banking account, or separate business credit/debit cards to pay for all of your business transactions.
5. Keep records of receipts and invoices. While the IRS regulation requires you to keep records for all receipts over $50, I always recommend recording all receipts, period. You can keep physical copies or in the cloud, but be sure to keep track of your records so you’re not trying to dig them out come tax time.
6. Be mindful of tax obligations. Speaking of taxes…make sure that you start thinking about taxes before you start earning revenue. This starts at the very beginning when you select the best legal entity for your company. You’ll also want to do your due diligence to understand all of your federal, state, and city tax obligations, including regional fees and registration. Since you’ll be separating your business expenses and keeping records, this will make it easy for you to deduct business expenses. Stay on top of your payroll taxes and 1099s and pay quarterly taxes. Hiring a tax professional is the best way to stay on top of your tax situation.
7. Set up a system to collect payments. Setting up a formalized accounts payable system early helps you to maximize cash flow and create essential financial reports. Work with a professional to identify the best tracking system for your needs. Once the system is set up, you’ll need to enter every expense and establish your invoice AP schedule. Place vendors on net 30 payment terms and work hard to ensure that you always pay your bills on-time and up-front. This will help you to build a reputation for financial stability.
Contact Early Growth Financial Services for help with accounts payable/accounts receivable.
8. Create a payment collection process. Setting up an AR process will help you to improve cash collections. Your system should allow you to list all open invoices and balances. For new clients, put your payment terms in writing. Establish credit guidelines and create a collection timeline so clients know what is expected. In these early days, your payment collection process should be simple, so you can just accept checks or use Stripe or Paypal to accept online payments.
9. Select a payroll provider. If you have employees in these early stages, you’ll need a payroll provider. Depending on your needs, you may choose a provider who offers piecemeal services or one that provides a full-service HR solution, including employee benefits. Whichever solution you go with, make sure you cover worker’s compensation and payroll taxes as well.
10. Forecast expenses. Record all of your anticipated expenses to help you to manage your cash burn. (If you’re looking for ways to reduce your cash burn, check out my previous post: Reducing Your Burn Rate.) If you can see that you will run out of cash, that’s when you’ll need to start raising funds…and move on to the next level of financial management and planning.[/vc_column_text][/vc_column][/vc_row]