You’re a start-up: what are the key things you need to know about accounting?
I’ve had several new business owners come to me over the years saying, “We’re a small start-up, but nobody tells us what we really need to know about accounts”.
If this is the situation in which you find yourself, you’ve probably gone into business because you had a great idea or a valuable skill to exploit – not to spend hours looking at numbers and spreadsheets.
And because you’re not trained in accounting, at times you haven’t ticked the right tax and compliance boxes along the way: but no one shared this with you until it was too late.
Many times it’s because you didn’t know you had to do it, or because there was simply too much information to process and understand. Maybe you just got too focussed on developing the product or service.
However, none of those is an excuse that will carry much weight in terms of compliance – you’ll still be obliged to pay penalties, and other problems may occur down the line.
So, it’s best to get up to speed with your financial responsibilities from the beginning. Here are a few ways you can do this.
Your accounting and tax requirements
The easiest way to do this is to work with a business adviser who can explain and demystify the financial processes for you.
We’ve broken down the accounting fundamentals into three key levels, each of which will help you to not only grow and prosper your business, but stay compliant and, best of all, worry-free.
No Offences – for the brand new start-up
At the starting point, you need the absolute basics done well and the comfort of knowing you’re ticking that accounting and tax compliance boxes.
We can, of course, help you with any of these, but whether you do it alone or not, you should have the basic information you need so that you know what has to be done, at whatever level your business operates.
Here’s what your business needs to take care of, at a minimum:
- Register your business with the Revenue and Companies Registration Office.
- Set up a business bank account (or multiple accounts – talk to us if you’re unsure).
- Basic bookkeeping and invoicing.
- Produce and file your statutory accounts.
- File your annual tax return.
- Review your accounts regularly, and get a report at least every quarter so you can identify potential profit improvements and cost savings
No Surprises – for when you need more control over your finances
As your start-up begins to gain customers and turn a profit (we hope!) you’ll get to a point where you need a better overview of your key numbers.
Your finances will become more complex, and you’ll want to improve the predictability of cash flow, profits and longer-term financial planning.
This is when you need to address the following:
- Create an annual budget for the business
- Update your annual budget on a regular basis (a full 12 months is a long time)
- Set up metrics to measure profit, loss, and performance against those budgets
- Get a clear overview of your cash-flow situation
- Create forecasts of future cash flow
- Ensure you are receiving proactive tax planning
- Address costs and profitability at a deeper level
- At a minimum, carry out quarterly reviews of your business and financial performance
No Regrets – for when strategic advice and long-term planning is needed
When your business becomes a more stable and established enterprise, your needs will change. Our experience is that, at this level, you’ll need the best possible advice on profit improvement, strategic planning and creating a business model that’s scalable and expandable in the future.
This is for the truly aspirational business owner. You know your business has even more potential and you don’t want to look back in the future and think ‘If only we’d done this…’ to secure that future success. So you’re willing to give it a lash and invest that little bit more to make sure you realise the full potential of your business.
At this level, you’ll need:
- Regular monthly management accounts to keep you and your management team informed so you can make good decisions
- A long-term strategic plan for the business, with clear goals, milestones, and budgets for each area of the company
- A real focus on making the business efficient, systemised, scalable and ready for sustained, fast growth
- Proactive support and advice from your business adviser to help you spot the pitfalls and grab the right opportunities.
Talk to us about improving your accounting basics
Wherever you are on your start-up journey, AccountsPLUS can help you address the accounting and tax fundamentals, and improve your control over your finances.
If you’d like to get your head around all those confusing numbers, do get in touch with us. We’d love to help your start-up become tomorrow’s success story.
Get in touch to arrange a meeting with the AccountsPLUS team
If you want to know what returns or filings you have to make for your business, read our post on Reporting/Return obligations.
