In a scenario where your startup is on its way from idea to formal business. There are many, many things to think about and consider.
And one of them may just include that all-important decision of when to bring in outside experts to assist you with some of the operational functions that go into running a business.
Those functions almost certainly include the financial aspect of your business. While you may not need -- or want -- an accountant, you could at least consider a bookkeeper to help with the various financial aspects. You may be a successful business owner with a multitude of skills, but if bookkeeping is one of your weakest links, you should probably hire a bookkeeper to help you out. But before you bring someone on board, you need to make sure they know what to do, and you'll want to set expectations for them in order to get what you need. A Bookkeeper is responsible for recording and maintaining a business's financial transactions, such as purchases, expenses, sales revenue, invoices, and payments. The Bookkeeper will record financial data into general ledgers, which are used to produce the balance sheet and income statement. The bookkeeper is generally responsible for overseeing the first six steps of the Accounting Cycle, while the last two are typically taken care of by an accountant. While there is a general overlap between the two professions, there are a few distinctions that are later discussed in this article.
The Benefits of Working with a
with a Bookkeeper
Working with a professional bookkeeper offers myriad benefits for your business and finances. In a nutshell, it comes down to these four vitally important services:
Clear, accurate, and comprehensive financial records that are ready for investors or the ATO.
A plain English translation of those records to help you better understand your financials and what they mean for your business.
Less time spent on minutiae and spreadsheets, and more time building your business.
Capable accounts payable and accounts receivable — so your cash flow is balanced and moving.
How A Bookkeeper Operates
Keep your focus on core business needs.
A startup needs the attention of its founder, including his or her attention to growing the idea into a viable product or service. That means that, as that founder, your time should be devoted to strategy, marketing, funding and other key areas that require your focus over the daily operational tasks of a business.
Stay out of what you don't really know or understand.
Not many founders have backgrounds in finance or even a working knowledge of accounts payable, accounts receivable and taxes. It's recommended that a professional who took courses and was certified in these areas handle those aspects of the business.
Calibrate a work-life balance.
While you could focus on core business needs and handle everything else in your startup, the problem is you'll have no time left at the end of the day or week for yourself or your loved ones. Therefore, you'll be missing that balance every person needs in order to stay healthy and not burn out on what you are doing.
Get a different perspective on the business.
Although you may believe you have a good idea about the state of your startup during the development phase, it helps to have another pair of eyes on this. Your bookkeeper can put the financials in order and run reports showing how you are doing each month, where the funds are going and how your efforts are paying off (or might need improving upon).
Escape the tedious aspects of business.
It's hard to imagine that the financial aspects of your business make you excited. You likely have no passionate feelings about tallying up payroll or writing checks to pay the bills. However, your bookkeeper may enjoy those tasks, so it makes sense to hand over these areas to someone who does them -- and does them well -- because of that motivation.
Make sure everything is paid on time.
Between traveling, keeping the startup moving forward, putting out the daily fires that pop up and staying balanced, something most likely gets left out along the way. And that often ends up being the bills that need to get paid. You don't want your credit impacted by late or forgotten payments, so put a bookkeeper in charge to give you the confidence that everything has been handled on time.
Ensure correct tax filings.
The last thing you want is to get audited or have the taxman after you just because you forgot those quarterly or annual tax filings. Depending on the type of business structure you've created for your startup, you will have various tax requirements, including estimated tax payments, corporate tax payments, payroll tax payments and other filings. It's ideal to find a bookkeeper who can handle taxes as well as payroll and other financial issues.
Maintain cash flow.
Because you are so busy, you may not realize that there are outstanding payments from your client base. Any late payments here could infringe upon the cash flow you need to keep your startup humming along. With a bookkeeper working for you, he or she can stay on top of this and send out reminders to make sure your cash flow remains optimal. This will also look good when it's time to seek another round of funding because you can show positive cash flow you might not have been able to show without that assistance.
Resolve conflicts of interest with any business partners.
With more than one founding partner, issues could arise where each partner has some idea of how the money should be spent and how to easily access it. Otherwise, conflict could arise that could impede the progress of your startup.