Setting up a new business is one of the most exciting ventures a person will undertake in their life. There is nothing quite like building something of your own, step by step, to the point where you can officially say you’re in business.
Naturally, it’s also overwhelming. Whether your skill is in sales, marketing, business management or something else, you’ll find yourself dabbling in the entire spectrum. It’s time to learn administration skills, get your accounting in order and juggle the myriad other tasks you will not have anticipated to come your way. It’s the joy and the challenge. The best you can do is plan for what you can and take the rest in your stride. Little by little, structures come together, and workflows bring balance to the days.
While you can’t plan for everything, you certainly can start a business with some aspects set up firmly from the beginning. Anything with government oversight or the potential to derail your operation should be established with some structure before the busy days come in steady and strong. Accounting is one of those items.
Every startup should start with solid accounting systems
With many moving pieces, business accounting can quickly get out of hand. If not done regularly, or even immediately, simple procedures like tracking expenses, profit and loss (P&L) reporting and accounts payable and receivable can be a nightmare when left to the end of the financial year.
Getting out ahead of your accounting responsibilities allows you to save a great deal of time. It gives you powerful insight into your profitability and lets you spot inefficiencies and opportunities to reduce spending (or increase it when it’s financially smarter).
Proactive accounting practices help you make smarter business decisions, and it’s the first thing potential investors or banks will want to see before giving you any money.
Accounting setup 101
Every business is unique. The sophistication of your system will depend on the current and projected complexity of your business’s financial landscape. If you’re a retailer selling goods, hiring staff and leasing a location, your financial balances will be much more complex than a freelancer selling their time as a service. But both can start in the same place.
Select a financial tracking system
Many small businesses that don’t need the sophisticated features of a paid online system may opt instead for a spreadsheet. Having a spreadsheet is better than having nothing, but we would recommend starting with the software. Why, you ask? Accounting or bookkeeping software can be exported or transferred to other systems later. 
As your business grows, your tracking system needs may become more complex. Transitioning from a spreadsheet to an accounting system is a substantial administrative hassle. In most small businesses, the onus will fall on the founder to do that arduous work. Starting with basic accounting software makes it much easier to keep track today and transfer in the future.
Find out more about Accounting Software Implementation here
Capture the correct data
It pays to track and input the correct information into your system from the start. This will include data for:
- The general ledger:
- Revenue
- Expenses
- Assets
- Liabilities
- Equity
- Profits
- Losses.
- Financial statements:
- Balance sheet statement
- Assets
- Liabilities
- Equity
- Profit & Loss (or income) statement
- Cash flow statement.
- Balance sheet statement
- General reporting:
- Bank reconciliation
- Credit card reconciliation
- Receipts (or proofs of purchase)
- Accounts receivable
- Accounts payable
- Tax.
This may look like a lot, but much of this information can be collected automatically or with small, consistent time investments working through your software.
Find a trusted business accountant
Whether you see an accountant as someone you deal with just once a year or a partner who brings value to your business throughout, the bottom line is that you will need one. And it’s wise to find one before tax time rolls around.
Consider the importance of an accountant to your business. If you’re dealing with investors, hiring staff and navigating complex financial environments, you will need a specialised business accountant with diverse capabilities to grow with you as your business blossoms. For example, here at The MGroup, we work with our business clients on everything from basic tax and vat reporting to forensic accounting, acquisition and exit consulting, payroll services, and bookkeeping.
Introduce weekly, monthly, quarterly and annual accounting tasks
The simplest way to avoid your accounting getting out of control is to allocate time for various tasks.
Weekly: Dedicate time to organise expense receipts. Take photos of these to digitise them. Upload them to your accounting software and file the originals somewhere safe.
Monthly: Ensure all incoming and outgoing financials have been correctly uploaded into your system and you have accurate statements for your balance sheets, P&L and cash flow.
Quarterly: Quarterly financial reviews are a wise business practice to look at how you’re tracking, if there are any inefficiencies and if your expenses should be reduced or increased depending on your tax forecasts. At this point, you may want to bring in an accountant to help you identify these opportunities.
Annually: Your annual task will be a sit down with your accountant to file your tax returns and review your performance over the past year.
Get the most out of your finances
At The MGroup, we can help you set the foundations of your business start-up to maximise your earnings from the first day through to your retirement. Get in touch with our team to discuss our range of business accounting services and how they can support you to do more.