As the owner of a startup, it is important to start thinking seriously about managing and organizing your finances. For a young company, the last thing you want is unorganized finances – it can almost be like a lead weight that drags your business further and further behind. When it comes down to it, though, it can be easy to let your finances get messy – mostly because you are focused on getting all the other facets of your business off the ground. This is one of the prerequisites of finance management: actually making fiscal organization a priority. Here is how to manage finances and accounting for your startup.
First and foremost, you want to make sure that you extricate your business finances from your personal finances. In the beginning, it can be a lot easier to run things using your own personal account, but soon enough it will start to get very unorganized. For instance, your taxes will start to become more expensive and it will be harder to keep track of payables. Moreover, you may start to default on certain payments. When it comes down to it, extricating is easy – all you have to do is follow a few steps.
One of those steps is to register your business – or to give your business some type of structure. The most common is an LLC, or limited liability corporation, which will essentially make your business its own entity and it will protect your personal finances from any defaults that your business may incur. For instance, if your business defaults on a loan, your net worth and assets are totally protected. On top of setting up an LLC, you also want to set up an EIN number – EIN stands for employer identification number. With this information, you can then set up a bank account under your business’ name.
The next step when it comes to managing finances and accounting is to hire an accountant. Hiring a professional bookkeeping firm – like Benham, Miller and Harris, Inc. - will allow you to put the consuming complicated fiscal matters in the hands of people who actually know what they are doing. In some cases, you may not know exactly how to file the right tax forms or how to deduct the right taxes from employee paychecks. An accounting firm will be able to streamline your taxes so that you not only file correctly, but an accounting firm may also be able to save you money.
In the end, managing your finances is important as a business owner – especially if your business is a startup and is just getting its sea legs in the industry you operate. If you don’t organize and streamline the fiscal infrastructure of your startup, it will be difficult to grow when you need to. One of the secrets to a startup’s success is being able to strike when the iron is hot, but if you don’t get your finances in order, you won’t have a hammer to strike with.