4 Start-Up Accounting Tips for the Young Trep When launching a new business, young entrepreneurs tend to forget one very important element: their books. Here's how to avoid making that mistake.
By Amrik Randhawa Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
Unless you're an accountant, the word "accounting" probably strikes fear in your heart -- or a little bit of nervousness, at least. For young entrepreneurs, the feeling is probably amplified. After all, poor bookkeeping out of the gate not only can set a project back in the short term, it can really come back to bite you over the long haul. Even young entrepreneurs get audited, you know.
That said, it is possible to avoid the ire of the IRS. Here are a four accounting tips to start your business by:
- Start off on the right foot. In the same way that you go through your email every morning, or in the same way that you do an inventory review each week, make your business accounting a habit. Set a recurring alarm on your calendar: "Review books!" The frequency is up to you, but you should carve out some accounting time at least once a month, if not more.
- Learn the lingo. The cumbersome terminology of accounting is sometimes the biggest hurdle. Chart of accounts? General ledger? Cash vs. accrual? Accounting lingo isn't natural -- and ignoring what's what won't help you. So take some time to understand the basics. The U.S. Small Business Administration's Small Business Development Centers are a good place to start, as are accountancy groups like the American Institute of CPA's and the Association of Chartered Certified Accountants.
- Find software that fits you. Find the accounting software that's right for you. Don't simply opt for what your friends use. If you're always at a desk, a desktop solution, like QuickBooks Desktop might make sense. If you're like most entrepreneurs and on the go 24/7, something mobile like Due may make more sense. If you're running your business from your iPad, go with a cloud-based accounting software package like Easy Books or Kashoo, which both offer iPad apps.
- Value good advice. Chances are, if you spend enough time trying to figure out an accounting issue, you could. But the reality is, you've got a business to run. And considering that you'll need to file taxes quarterly -- not just annually -- there should be a certain degree of urgency involved. For help, look into local resources such as entrepreneur-focused groups for advice. (In Vancouver, where I'm based, we have resources like the British Columbia Innovation Council and the Vancouver Entrepreneur Meetup. Scour your local community for co-working groups as they'll usually have a schedule of talks and classes specifically for entrepreneurs. WeWork Labs in New York is a great example.) Also, ask former bosses and fellow entrepreneurs to see who they use. Usually, there's great value in an accountant or bookkeeper who specializes in small business. If nothing more, they'll be a voice of comfort if you receive some alarmingly confusing IRS mail.
In the end, accounting isn't really that scary. If you start off right, it can actually be fun. After all, that's where you're going to see your fortunes grow.
What better bookkeeping tips would you add to this list? Leave a comment and let us know.
