It can be nerve-wracking and sweat-inducing but it’s also one of the most exciting times in your working life. The startup of your own business. Regardless of what field your business is in, compared to the entrepreneurial thrill of launching your dream, the least likely area of interest to you may be the accountancy and bookkeeping. A necessary evil? Necessary yes and not at all evil. In fact, a virtual CFO is an important partner in the process.
Sound accountancy practices, both in the lead-up and from day one of your new enterprise, can be the difference between success and failure. Here are the ways your accounting can help you run your business to optimum effect.
Success is in the details.
The right accounting measures enable you to know, right from the start, how much money is coming in compared to how much money is going out on expenses. Armed with that accurate knowledge you can assess how much you should be pricing your products and services, whether or not you can afford to hire staff and if so, how many, and where you need to trim back or negotiate better costs on your outgoings.
The importance of cash flow.
A business always needs cash in reserve to ensure it can keep running and meeting the ongoing cost of renting premises, utilities, payroll, insurances, and marketing. Your accountant can determine how much is needed to ensure you do not encounter a cash flow problem, as this is one of the main causes of business failures.
Staying ahead of the game.
Be prepared well in advance for the end of the financial year and for your business’s first tax return. Keep accurate records right from the beginning. This means that with your income statement and your profit and loss statement, you avoid the difficulty of having to pull it all together at the last minute.
Don’t fall short of your tax requirements.
If you’re required to collect sales tax, GST, or an employee’s personal income tax, then it’s imperative you know the amount required and that you have it set aside for payment to the ATO.
Presenting your company’s potential.
If you’re an entrepreneur writing a business plan with a financial forecast to present to lenders and investors, then your accounting model forms the basis of that plan. It can be the difference between going forward or being stalled due to a lack of investment.
Highlighting the ongoing validity of your business.
Accountants record the value of your assets and keep these up-to-date. This is vital to show the overall value and continuing viability of your business, in particular to banks and investors who make crucial decisions about your venture based on the latest figures.
At Propeller Advisory, we are more than your accountant or bookkeeper, we are your virtual CFO and we can play a part in the financial planning and launch of your startup.