Does a Start-Up Need a Business Accountant?

Before you take your dream from the beginning stages of notes and drawings to actually running and operating your business, you need to make sure you have someone to help you with your financial organization of the business. Starting your company takes a great deal of time and passion that you probably don't have for the accounting aspects of running your business.

Starting the right way with an accountant can set you up for better success from day one. Although it is an added expense you thought you should hold off on till funds start rolling in, you may be missing out on what a business accountant can do for you in the start-up phase that can be saving you time and money.

Finding an accountant that you can trust and work with can be a time-consuming task. To make it easier, you can always ask for references from friends, family, or your attorney. This is an important decision, so make sure your references are suitable for your needs. There are also search firms like Ageras that will provide you with certified accounting professionals in your area. These services are generally free of charge to you and will give you a handful of professionals that are experienced to handle your business and industry accounting needs. You can consult with each one and make a decision on who will be the best for you and your business.

Reasons for Startups To Have an Accountant

If you are still wondering why it is so important to have that accountant right at the start-up of your business, here are four reasons to consider:

1. They can help you determine the best software to use for your accounting system.

2. They can help you determine if an LLC, sole proprietorship, corporation, or partnership is the best business structure for you.

3. They can assist with your initial banking and set up of accounts and bank cards.

4. They can file your financial statements and taxes to ensure you are in compliance.

Imagine the time saved in just these decisions alone by having a professional guide you through these initial steps. You can take this extra time now and work on getting your business off the ground, finding your clients or partners to work with, and establishing yourself in your industry.

How Accountants Grow Your Business

You can also work with your accountant throughout the year, not only at start-up and tax time. This will enable you to have a financial advisor who is willing to guide you to success. If you have big business decisions like expansion and hiring an employee, the purchase of large equipment, or adding more inventory, your accountant will be able to assess when a good time is for your business for doing these ventures.

A good financial plan and budget are the backbone of growing your business. Accountants are your resource and guide for doing just this. You can meet with your professional quarterly to set the stage and plan for your next quarter.

As your company and cash flow expand, managing your income and expenses becomes just as important as managing your start-up funds. Here is how your accountant can now help you:

1. Invoicing. They can set up a system to help you collect account receivables more efficiently.

2. Cash Flow. They can help you organize your cash flow when you have unexpected expenses.

3. Payroll. If you do have employees, they can assist you in managing payroll and staying compliant with payroll taxes.

Spend Your Time in Your Business

You have spent a great deal of time dreaming about your new business, planning its execution, making a presence in social media and in your industry, and building your client base. Keep your focus on your business and not on the stresses of compliance and accounting procedures.

Not having an accountant during start-up could have cost you not knowing what deductions you could have been taking and planning future deductions. Take the guesswork out of big business decisions and future budgeting. Turn to your professional financial advisor and work together to grow and succeed. Your accountant may not be the least expensive budget item you have, but they will save you more time, energy, and money than you could have on your own.

Is Your Business Drowning in Debt?

Running a business with sufficient funds is the key to being successful over the long term. You need extra funds available in case you need to hire a new team member, market an existing product or service, or test the development of a new product. Avoiding taking on debt as much as possible for long as you can is essential to the longevity of your business. Continue reading to learn how to avoid going into debt or stop digging yourself into a larger debt hole.

It’s unfortunate but many businesses get into deep debt, which they are unable to pay off. In fact, 26,000 businesses go bankrupt every year in the US.

Knowing how to deal effectively with your debt can be important for reducing financial damage in the long run. There may be a way to keep your business afloat. If not, it’s important to find the exit strategy that’s going to cause the least harm to you and your associates. This brief guide can help.

Top Signs Your Business is Drowning in Debt

Here are a few tell-tale signs your business is in debt and doesn’t have any way out of it.

You’re consistently accumulating debt (on credit cards, borrowing from family or friends, or taking out personal loans) faster than you can pay it off. You believe that every idea you have will be a huge success and yield massive results for your business but only results in failure.

People are chasing you for payments. You receive past-due notifications or telephone calls from those you owe money to. If you have vendors and suppliers calling you to make payments and you hide from them, then this is an issue. If you’re in business, paying your bills should be the first thing you do every month to prevent being turned over for collections.

You’ve lost track of how much you owe - and who to. If you don’t keep spending records, then you probably don’t know how much revenue you have coming in vs. going out. This is a recipe for failure.

If you don’t track your expenses, then there’s no way you will be able to prevent overspending. Creating a budget for expenses every month is vital to prevent spending too much and getting into debt.

You’ve made significant cutbacks (by laying off staff, closing offices, and eliminating excess waste) and you’re still struggling to pay off your debts. If you’ve cut out the extraneous expenses and are running with a skeleton operation, and you still can’t make your minimum monthly payments, then it’s time to evaluate how you can increase revenue so you can start paying your debt’s minimum monthly balances. Paying the minimum amount due every month isn’t ideal (because of high-interest rates) but it’s a start.  

Steps to Take to Start Getting Out of Debt

First, you need to decide how much your business means to you and your livelihood. If you’re eager to keep your business alive and continue running it yourself, it could be worth looking into debt consolidation options and debt reduction options, especially if you have tens or hundreds of thousands of dollars in debt.

A consolidation loan may be able to pay off multiple debts, turning your debt into one single reduced monthly debt payment. Meanwhile, there are specialist services that may be able to help you negotiate with debtors/creditors to reduce interest rates and lengthen terms so that your debts are easier to pay each month.

If you want to keep your business alive but don’t want to run it yourself, then there may be the option to sell your business in the near future. Selling a business with huge debts isn’t easy but it can be done with the right approach – some buyers/investors specifically target struggling businesses and turn them around to be profitable. You may have to accept a very low price and other unfavorable terms, as well as the option of continuing to pay off some of the debt yourself. But certain business brokers can help you with the sale process. This guide at https://www.forbes.com offers more information on selling a business with debt.

The third option is to close your business and go into voluntary liquidation. An IP will sell any company assets, pay creditors, and manage the closure for you. Most of your debt is likely to be written off and you can walk away without that debt looming over your head. This can be a viable option for those who have considerable debt and can’t pay it off.

There are other services such as https://www.dtss.us/ that can help you find the best option while causing the least amount of damage to your credit score. These services can educate you on your rights so that you know exactly what you can and can’t do.

Bankruptcy as a Viable Option to Eliminating Your Business Debt

Bankruptcy is the fastest way to wipe debts without resorting to total liquidation. You can go bankrupt and keep your business alive if you’re a sole trader or the sole owner, but this isn’t an easy path. Often assets such as your business or assets that the company owns will be used to pay off any outstanding debts. While this is not the right option for every business owner, it’s worth seeking the right advice before declaring bankruptcy.

There are also support services that you can use to help you recover after bankruptcy. These companies provide services that could involve finding lenders where appropriate and repairing your credit score.

How to Manage and Keep Your Small Business Finances in Order

By: Barbara Davidson

Being the boss of your own company is a milestone, but it also entails being vigilant as you manage all the moving parts of your enterprise. As a small business owner, it pays to be smart about your finances. Before you become stable in a competitive landscape, you’ll first have to map out the road ahead and secure your financial standing.

Small business budgeting is one part of the equation. Successful entrepreneurs know when to cut back on expenses and invest in others, when to negotiate, and when to sit back and watch the money grow. Whatever venture (or adventure) you find yourself in, it’s bound to be a learning experience. 

Are you ready to embark on your journey as an entrepreneur? Here are 12 tips on how to manage and keep your small business finances in order. 

1. Set clear financial and strategic goals

It’s one thing to plan the day-to-day operations of your business; it’s another to set a clear vision of what you want out of your investment in the long run. Don’t lose sight of your future success simply because you’re caught up in present-day hustles. 

Be sure to identify growth targets and the metrics that will define your success. Set a goal and timeline. For example: becoming a half-a-million-dollar company within three years. This will also help you create a strategy for seeking additional funding, building out your product line, or marketing extensively.

2. Plan for expenses and keep costs to a minimum

Knowing the nature of your industry and the demands of your business right from the start will lead you to better financial decisions. Identify production, operational, payroll, and marketing costs, as well as some contingencies, and plan for them at least a year in advance.

Learn to keep costs to a minimum by spending only on essentials and negotiating the terms of your contract with suppliers, partners, and affiliates. Develop a budget that accommodates these expenses even in lean months. It also helps to make financial forecasts by factoring in possible challenges ahead.

Look at certain expenses and what you could bring down. For example, you might want to look at the cost of your business phone or phone and get a better smartphone deal. Paying too much on your phone contracts is burning money.

3. Separate business and personal finances

A rookie mistake that small business owners tend to make is to mix up their personal and business finances. Failing to open a separate business bank account can prove disastrous if the cost of doing business begins to strain one’s personal finances. This typically happens among sole proprietors who invest their own money into a business without accounting for how much the venture is actually eating into their personal savings.

4. Get an accountant and an accounting software

Getting help from an accountant is an essential part of your business strategy. You wouldn’t want to lose time and be stuck doing invoices and calculating taxes instead of growing your client base or product line.

But if you prefer to do things in-house (and have a bit of leeway, too), then getting an accounting software is another option for your team. Automated features in these software solutions reduce the incidence of human error.

5. Monitor your finances closely

Be vigilant about where your financial resources go. Keep tabs on important factors such as gross revenue, expenses, net profit, and cash flow. Even the most lucrative businesses can run into trouble if they overlook loopholes in their financial management.

Using apps and software programs to help you keep an eye on your finances is important, especially if you are not an experienced accountant. An online percentage decrease calculator, tax software, and other help are available online and can benefit a business of any size. 

6. Be wise about applying for credit or loans

Don’t wait until the rainy days to secure funding through credit lines. You are more likely to get approved while you are in good financial standing. Applying for a loan or credit should always be a strategic move: remember to use the additional resources as leverage for the business to grow.

7. Be strategic in your spending

When resources are tight, small business owners are often forced to cut back spending on non-essential items and redirect funds to cover more urgent expenses. Most entrepreneurs will choose to part with their dime if the cost will directly or indirectly lead to the business becoming more profitable because of it. For example, spending on top-of-the-line technology that will outlast cheaper options and deliver the best use value in the long run.

8. Negotiate the terms of your contracts

Being a small business owner requires you to be able to strike good deals with a host of suppliers, partners, and affiliates. Before negotiating a contract, decide on the terms and conditions, such as lease terms, payment options and schedule, handling costs, and possible penalties for late payments. Find out if you can also get a bargain on exclusive partnerships and promotional deals with suppliers. Aim to keep costs low and get the best value for your money.

9. Get insurance

Small businesses can benefit from having insurance if they ever run into misfortune or tragedy. A good policy will cover the costs associated with property damage and the legal claims made against the company. Disasters can leave tremendous financial consequences on a business, so entrepreneurs need to know the type of insurance their business needs. It’s all a matter of preparing for the worst since, in the absence of coverage, business owners might end up paying for costs out of pocket.  

10. Invest in cybersecurity

Hackers and fraudsters are hungry for customer and financial data—and they’re eager to exploit any business regardless of their industry and size. Companies must set up their protocols and ensure digital security even before an incident occurs. Investing in firewalls, anti-malware, and threat detection tools should be part of the business plan right from the start since the financial and reputational costs of a data breach can cripple a small business.

11. Set up an emergency fund

Apart from raising capital and ensuring revolving funds cover operational costs, small business owners should set up a separate emergency fund that will help them stay afloat even during lean months. Companies that rely on seasonal sales will often prepare for the off-season by putting aside a percentage of their income in months when the business is booming.  

12. Pay down your debt

Make it a point to reduce the size of your debt by allocating a percentage of your earnings toward debt repayment. Falling behind on your payments can leave you with a bad credit score and lock you out of additional sources of funding, which may be crucial to your business. Being financially responsible entails keeping a good credit score and ensuring bad debt doesn’t carry over to the next fiscal year.

Taking charge of your finances is the first step to ensuring the future of your small business and paving the way for its eventual growth.

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Barbara is a Senior Content Writer at Enova International and a contributing writer to various business and finance blogs.