Common Accounting Problems Faced by Business Startups

In terms of running a business, one of the most important things is to keep  business finances at all times. This makes sense as the primary goal of many businesses is to generate income and earn a profit. Regularly checking and maintaining the financial health of your company is imperative. This is where proper accounting processes come into focus.

Large companies and well-established small businesses typically have robust accounting systems set in place. They may have hired professional accountants or dealt with a third-party accounting firm in the process. This however may not be the case with a business that is at its inception. Chances are they are confronted with some accounting problems that they may want to rise above.

In this article, we will share four common accounting problems faced by business startups and how to survive financial struggles:

1.  Handling cash flow

Cash flow can be the greatest challenge that a startup business will encounter during the first few months. It can be quite difficult to manage what’s coming in and out of your business funds.

For the most part it takes about six months to two years for companies to see profits in their business. It is therefore imperative to be patient while carefully handling financial cash flow and watching it grow over time. An Accountant provides the information companies need to better manage their finances.

2.  Mixing accounts

There’s a tendency for small businesses to mix personal and business bank accounts during the initial operating stages. While this is a common problem committed by startups, combining financial accounts can be problematic in the long run because mixed funds can lead to missing out on tax deductions.

As soon as a business takes off, they should find a way to separate accounts for every area of their finances, and never mix personal and business accounts. If a business gets audited, the mixing of financial accounts could quickly become a nightmare.

3.  Tax planning

Tax is a complicated subject of business conversation, especially for a startup business. The problem with tax planning and management is that there is no one-size-fits-all formula that businesses can follow. Tax needs and obligations vary from one company to another. For this reason, it’s best to hire tax consultancy agencies or online accounting firms that can help to handle all taxes.

4.  Dealing with invoices

Handling invoices entails drafting payment information in detail and asking for payments from customers, which is why it can be a tedious task. At the same time, one will have to deal with all the account receivables to make sure they’re being paid. Fortunately, there are online accounting tools that one can resort to, or best bet is to, hire an online and brick and mortar small business and tax consultancy firm instead.

If you would like to dive deeper into the benefits of working with a cloud-based accounting company, check out our blog that dives into the key problems solved by an online accounting firm

Conclusion

Accounting is paramount for any business, no matter the size. A business startup, however, may be faced with common accounting problems such as handling cash flow, mixing accounts, tax planning, and dealing with invoices.

If a business is not an expert in business accounting, it will be best to hire an online accountant for said business. The option is there to either choose an online accounting firm or directly hire an accountant. Either way, an hired professional will manage the  business finances and help the startup grow overtime!

In need of small business bookkeeping services for your startup? Leave your financial hassle and stress behind and depend on our online accounting and small business consulting firm in Ontario Canada  Get in touch with us today to see how we can help to lead you to financial success.

contact us for a free consult : 1-833-blc-grup