You can take easy steps to eliminate some of the stress and anxiety of launching a startup with small adjustments such as by hiring an outside accountant, which is recommended by Forbes. These are five reasons your startup should not do your accounting in house.
Many entrepreneurs believe they can take on the accounting or to assign it to another founder or team member. This is one area that often overwhelms people because they do not anticipate that small business accounting will be so dramatically different from personal accounting. Also, when you hire an accountant are only paying for the time they actually work; therefore, you will save money. This allows your team, including yourself, to focus on other imperative areas of business.
Your reputation is of the utmost importance during your early days. You do not want to have the reputation of being a business that does not pay bills on time. This is an issue for many startups who simply do not have enough time for everything that needs to be done. Often times, accounting is overlooked. If bills are paid late, you will tarnish relationships with your preferred suppliers and potentially close your doors before they were ever really open.
Personal versus Professional
You must separate your personal banking from your company banking. You might think it to be easier to keep all the money in one place seeing as you will be paying yourself a salary, however this will cause more problems than you can imagine. If you hire a professional to do your taxes, it will help to minimize the temptation to pay yourself and others money that should remain in the business account until the appropriate time.Entrepreneur.com has compiled a list of resources that will help you understand your accountant and their decisions more easily.
One of the best ways accounts help is that they will manage all of your transactions and records for you. When entrepreneurs try to maintain their books early on they rarely keep track of every transaction including money withdrawals at cash points and coffee for the break room. When you do not manage your accounts meticulously, you have no idea which bills you can and cannot pay at the end of the month. An accountant eliminates this guesswork.
Entrepreneurs are typically not experts in accounting practices nor accounting laws. If you do not follow accounting and tax laws properly, you could put your business in jeopardy at anytime throughout the year. You also must ensure you are making legal write-offs and that you are spending the appropriate amount of money at the end of the year to maximize your returns.
It may be tempting to try to complete your accounting in house during the startup phase, however it will most likely cost you more money in time, effort and errors than if you paid someone a few hours a week to manage your books. You will save money, time and stress which is all priceless as you work to create a sustainable business that will be profitable.