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How to Start Your Business Finances off on the Right Foot

by Olufisayo
How to Start Your Business Finances off on the Right Foot

Financial management is one of the biggest challenges facing entrepreneurs. Smaller companies face the biggest challenges, with only 25 percent having a dedicated CFO on staff. Accounts receivable, cash flow, managing paperwork, closing the monthly books and payroll top entrepreneurs’ list of accounting concerns, along with ghost assets associated with physically missing items. If you’re just getting your business started, here are some steps for taking control of your financial management.

How to Start Your Business Finances off on the Right Foot

Choose Your Accounting Software

Choosing your accounting software is a logical place to begin because your choice of accounting software affects the efficiency of your financial management. A solution with cloud access, such as Sage 50, gives you the flexibility to manage your books from any location or device, making it easier to update information and stay current.

Cloud-based accounting solutions can also integrate with other mobile apps, making it easier for you to streamline the workflow between your accounting software and other functions, such as sales, payroll and tax preparation. Another advantage of cloud accounting software is that you can scale your pricing to meet your need level, which is an affordable solution for companies that are too small to afford a full-time in-house accountant.

Plan Your Business Budget

A key to starting your finances off on the right foot is building a business plan that includes a budgetary plan. A good business plan should include several key financial statements to help you plan your finances over the first few years of your business, the U.S. Small Business Administration says. These include an income statement to project your profits and losses; a balance statement to show your assets and liabilities; and a cash flow statement to show how much money is coming into your business and going out in a given period. You should project your finances over the first three to five years of your business to gain a realistic long-term perspective. Use monthly or quarterly projections to estimate your first year and quarterly or annual statements for later years. SCORE provides online guidelines and templates you can use for your financial statements, or your accounting software program may provide templates.

Establish Your Bookkeeping Procedures

To keep your financial records updated, establish some standard operating procedures for maintaining your books. These should include routines for recording daily transactions, maintaining your general ledger, maintaining your cash records and keeping ledgers for your accounts payable and accounts receivable. If you do your own bookkeeping, you will need to know how to do each of these procedures. If you work with an accountant, you will need to know which records you need to provide them. In either case, document your procedures so that you and other members of your staff can remember them and use them as a checklist.

Automate Your Accounting

The more you automate your bookkeeping procedures, the more efficient and accurate your financial management will be. For instance, use a point-of-sale software to automatically import your sales transactions into your accounting software. Other financial functions you can integrate with your accounting software include inventory, expense reporting, payroll and tax preparation.

Following these procedures will help you start your company’s financing off on the right foot. Be sure that you train your staff in the accounting procedures you establish and follow them consistently, building them into your daily routine. By making these procedures part of your ongoing operations, you can maintain control of your financial records from Day One and reduce the amount of time you spend on paperwork, so that you can spend more time running and growing your business.

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10 Things You Need To Do Before Starting A New Business June 27, 2016 - 7:13 PM

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