As a startup, it is important for your business to make smart financial decisions in those first couple of critical years. This need can leave you unsure whether or not you can really afford to outsource your bookkeeping to an accounting firm. But the real questions it, can you afford to not have your bookkeeping taken care of by experienced hands?
If you have been considering whether or not a bookkeeping service is necessary for your startup company, here at AA Tax & Accounting Services, we’ve got 10 essential reasons why you should outsource that essential work.
1. Protect Your Business From Financial Errors
One of the major reasons why startups go under within the first five years of their existence is due to financial errors. These financial errors can be tied into a number of things, ranging from clerical errors that led you to believe that the company was doing better than it really was, to just being too disorganized with your financial records and not truly understanding where your business stands financially.
With a bookkeeper, especially an experienced accountant acting as a bookkeeper, your business is far better protected from the common financial errors that have toppled many other entrepreneurial dreams.
2. Assist In Setting Company Budget
Once you have precise records on your company’s cash flow, current balance, and other key financial factors, your ability to set a practical budget for your company rises up significantly.
Consider this scenario—say you launch a small custom eCommerce jewelry startup. You bought a custom engraving machine for $15,000 and have $10,000 in inventory. While the orders pour into your online storefront, if you have no way to track your accounts payable, accounts receivable, shrink from mistakes or order redos, shipping prices, and other costs, you can end up bleeding money from a business that can outwardly look successful.
But with a bookkeeper to track these things, you can more easily set a company budget and see if you can safely expand, bring on employees, buy more equipment and more.
3. Keep Important Financial Information Organized
As you can see in our budgeting example, having financial organization is critical to the success of your startup company. Not only can it help you budget, but frankly, keeping your financial records in order with the help of a bookkeeper can benefit your business in a number of ways.
For one thing, with the proper organization offered by a bookkeeper, you can put your hands on your startup’s financial information and be able to quickly grasp how your company is doing. That way, whether you are going into a potential investor meeting or just want to check up on your business, you can do it easily with the help of a bookkeeper.
4. Prevent Future Frustration During Tax Time
That organization also plays a huge role during tax season. Many startups are left scrambling for receipts, invoices, inventory records, and more once tax season rolls around, with little idea where to find most of the information that they need.
But with a bookkeeper on your side, you can have all that information ready to go. Also, by working with our accountant as your bookkeeper, he can also file your taxes for you. If for some reason the IRS performs an audit after your taxes are submitted, having accurate records is critical to satisfying the requirements of the auditor.
5. Free You Up For Other Tasks
When you act as the bookkeeper for your startup, you are chained to the responsibilities of both business owner and bookkeeper. In the early phase of your business, this may work to a certain extent, but the object is to develop your startup to the point where your attention is taken up with growth and other opportunities. But if you neglect the bookkeeping while pursuing company growth projects, your business can crumble.
By having a bookkeeper to take over your duties as company bookkeeper, you can free yourself and your ingenuity to develop your business beyond its current place without worrying that things will fall apart.
6. Help With Projecting Future Business Growth
Your startup’s day-to-day bookkeeping can be used as a road map to future success and growth, but only if it is kept up accurately.
With accurate bookkeeping, you can track buying trends, inflation on purchased inventory, see if your business has a holding pattern of staying in the green without any dips into the red, and other key financial indicators. Some bookkeepers can create these reports for you, though if you want to be sure that they can, you can always work with AA Tax & Accounting Services. Our accountant can create the reports you need to help you visualize future business growth projection.
7. Ensure Vendors And Employees Are Paid On Time
No one wants to become known as that kind of business owner. You know the kind, the one that always has a million excuses why payment is late. But, whether it is late payments to vendors or late payroll for employees, it is best if your startup stays on top of its financial obligations.
Once you have a bookkeeper to take care of these tasks, you won’t have to stress about whether or not the appropriate payments have been made. Instead, you can safely leave that task in the hands of your bookkeeper.
8. Work To Prevent Conflicts Of Interest And Embezzlement
If your startup is a partnership or has other invested parties, it can be considered a conflict of interest if you handle the bookkeeping personally. No matter how good a relationship you and your business partner had prior to opening a business venture together, the stress of owning and operating a business can put cracks in that relationship.
And if you even make an innocent mistake on the bookkeeping, that stress can lead to suspicion and a permanently damaged relationship, even the dissolution of your shared startup company. Also, if you are not the one in charge of the company bookkeeping and your business partner is, there will often be the shadow of embezzlement hanging over your relationship.
To prevent financial wedges coming between you and your business partner, bringing in a third-party bookkeeper is an ideal solution. With a bookkeeper checking the cash flow and the rest of the financial records, both partners can relax and work together more easily.
9. Attract And Keeps Company Investors
A bookkeeper who provides you with organized and detailed company financial records can be invaluable when it comes time to look for investors. In general, investors are looking for clear records of success so that they don’t back businesses that are doomed to fail. But with the financial records that a great bookkeeper can provide you with, you can prove to potential investors that your startup has legs to stand on.
Also, investors often require regular updates on the progress of their investment. You can keep these investors satisfied with their choices to back your startup company as you can provide them with the clear financial records of your success.
10. Provide You With Greater Peace Of Mind
Last, but certainly not least, having a bookkeeper like our experienced accountant can provide you with a great deal of peace of mind. Operating a successful startup can be stress while it is rewarding, and by having an accountant manage the many financial tasks behind the scenes, you can at least relax knowing that your company’s financial needs are being properly met.
Choose AA Tax & Accounting Services As Your Bookkeeping Service
To provide your startup with flexible bookkeeping to suit your business’ needs as well as an experienced hand when it comes to taking care of the bookkeeping, AA Tax & Accounting Service is who you need. If you would like to discuss your company’s bookkeeping needs with our accountant, feel free to contact us to set up a consultation.