Archive

Archive for April, 2013

Importance of Accounting for Start Ups

April 17, 2013 Leave a comment

Start ups are vital for a vibrant economy because they contribute a lot towards new technology and exciting products as well as services. Start ups operate in an environment of low resources and limited funding but their focus is on the core activities of the business. The activities can either be sales, marketing, research or development. But, one of the most important functions that cannot be ignored is accounting. Accounting systems for equipment manufacturing firm that generate revenue trends for various income streams will lead to important insights such as service revenues.

For those people, who want to start up accounting one of the most important things to do is selecting an accounting package. The package should not only meet your immediate needs but handle your expected growth in future. There are so many firms that are using a basic version of accounting software. You should spend some time with the startup accountant to come up with a good accounting system. Some of these areas include expense procedures, creating important sales purchase and establishing a structured chart of accounts. Creating a chart of accounts is a very important process for start ups. Very poor created charts that have insufficient or multiple expense accounts create a very big headache.

There are mainly two types of accepted accounting methods cash and accrual accounting. There are small firms that have the option of selecting these two while the others must use accrual method. The accrual method usually shows the real time financial health and the accounting software packages simplify the whole process of accrual accounting. Moving from cash system to accrual is simple like checking a box in your accounting software.

You will have to set up your accounting system unless you are equipped with a degree in accounting. Every start up is unique in its own way but most of them start with startup bookkeeping. Bookkeeper’s services make a lot of sense for average start up who have no plans on building an empire. Accounting is something that most business owners lack. If the owner is not comfortable in dealing with his own accounting matters, the owner can use outside accounting or bookkeeping services. A small business can do all its financial matters in an orderly way.

Advertisements