Accounting tips for small businesses and start-ups

The most daunting task after founding your startup is kickstarting your accounting. Accounting is not as easy as falling off a log but keeping track of your expense, cash flow, and business transactions are essential, and it will pave the success path of your small business.

Challenges faced by startups in accounting

The challenges emerging in the budding days of a startup can be frightening. Firstly, you need to juggle multiple financial information like sales, debts, expenses, payroll, etc. Secondly, raising finances to fund your startup. Thirdly, choosing a payment method for employees. Lastly, prepare all financial statements and reports to get a clear picture of your business.

Stepwise Accounting Guide 101 for startups:

These challenges can be overcome and head start your accounting with the following steps:

  • Strategically Draft a Budget

Without a strategic business plan, you will sail without any end goal and make budgeting errors. It ensures that every decision you make aligns with your organizational goals. Firstly, it forecasts revenue, plans expenditure, allocates funds strategically, and communicates the purposes of the business. Secondly, it increases operational efficiency. Thirdly, you can make profits on seasonal business days with a strategic budget. Last but not least, it secures a business from a financial crisis by improving cash flow management.  

The process of drafting a business plan starts with analyzing the operating cost of the business, and it should consist of fixed, variable, one-time, and unexpected expenses. Next, you must list all the income sources and forecast your revenue to set realistic financial goals. Besides these, you need to accommodate interest and taxes while integrating all the departments—furthermore, draft estimates for financial statements. 

Here are budgeting tips to smoothly manage your finances.  

  • Develop a bookkeeping system

Bookkeeping begins with creating a new business account to split personal and business funds. Next, you need to unclutter and organize all the records in one place to save time. Furthermore, it would help if you track your expenses and account receivables. It’ll help you know exactly where to look in times of tax filling and making or receiving payments. Using an excel spreadsheet or software system such as Quickbooks enables you to keep track of all the expenses, revenue, and invoices in one place. 

As a business owner, you must keep an eye on your invoices to trace your billing. Bookkeeping is a tedious and time-consuming task, and therefore, many companies are outsourcing their bookkeeping to increase their productivity. U.S. outsourcing statistics also suggest that outsourcing in the financial services market will continue to rise by almost 7.5% annually. 

  • Create a trustworthy Payment Gateway

All your marketing and promotions could fail if you don’t have a payment gateway as it structures your company. With this step, you can start selling your product, and it impacts your sales, as now providing invoices portrays you as a trustworthy startup.  

With the growing business losing track of payments and invoices can be evident. So, it is advisable to integrate all electronic payment systems with your accounting software. It allows you to automate your accounting systems and books. Also, it saves time and adds accuracy by removing human errors from accounting records—automated tracking of payments in real-time increases cash flow and cuts labor costs. 

  • Manage Cashflow System

A study from Intuit stated that 61% of small businesses worldwide struggle with cash flow. An extended cash shortage is probably the worst nightmare of an SMB owner. The cash shortage often occurs due to the massive cash inflow and outflow gap. The first step is to analyze your inventory over time. It includes identifying the low-demand products and selling them at a discounted price. Also, it would help if you stopped buying any additional stock of such products. Instead, invest and buy the inventory giving high returns. 

If you deal in monthly payments, shift to getting paid right away once deliverables are given. It is best to open a business line of credit when your business credit score is good, and it also reduces the rejection risk of getting credit in the future. Instead of buying the various required equipment, you can lease them to minimize the short-term financial burden. Last but not least, make the best use of technology to create streamlined budgets and project cash flow with cloud-based software and apps. 

  • Set up payroll System

Either you have hired or plan to hire more employees as a startup. But have you thought about how you will pay them without delays? If no, then the answer is by setting up a payroll system. Initially, it would be best to determine how often you’ll pay employees. You must provide Form W-4 to identify withholdings to deduct tax from paychecks. Moreover, constantly be updated on the IRS deadlines to avoid penalties. 

In the United States, the IRS estimated that one out every three employers had been penalized for payroll. Billions of dollars in fines are collected each year. It can also destroy your hard-earned goodwill. So you can consider outsourcing your payroll to a cloud-based payroll service provider. It will give you freedom from security and software updates worries as they are transparent and accessible with 24*7 customer support.   


Accounting, at times, can be exhausting and divert you from your end goal. That’s why we empower you with accurate accounting and bookkeeping services. A top-secret is that our estimates grow only with your startup’s growth. So, schedule a call with us now and get relief from the accounting stress.