Entrepreneurs at today’s time have to face a highly competitive environment which takes up most of their time, focus, and energy. Most of their efforts are put into promoting their product and getting their venture going. Many times, the founder and co-founders get too busy in a rush and forget to maintain the core payroll requirements of the business which results in some significant issues in the firm.
To help such entrepreneurs, we have some basic steps to get them started off with their business’s accounting:
Open an Account
Of course, the first step is to have an account where you can deposit and withdraw your money from. For convenience, you can have different accounts for different purposes like vendor payments, receipt through cheque or in cash, receipts from payment gateways and tax payments. After your company is registered, you can quickly open the account using registration certificate and pan card application. Make sure you compare the features and policies of the banks when you choose one.
Be informed about your business’s expenses and where most expenditure is going. Maintain a system of recording all your bills and other documents. This step is crucial in determining where your company stands financially at any point in time.
Find out who your vendors are and start enlisting them. Maintain a proper record of all the payments and purchases made. A good practice would be to keep verifying your balance in the vendor’s account from time to time.
Maintain Customer Data
Keep a check on the different product types you offer to associate each of the customer with the product they’ve brought.
Maintain a record of your daily transactions. There are three methods you can choose from. The first method is to do it yourself by keeping a simple Excel spreadsheet or using some software like Quickbooks or Tally. The second method is to outsource the accounting tasks to a local or cloud-based accountant like Hubco.in. The third option is to hire an accountant if your company can afford it.
You can either follow the cash method or the accrual method. In the cash method, the record keeping is done at the time when the actual payment or reception of the expenditure or income was done. While in the accrual method, it is done at the date of a transaction.
As your business grows, you will have to hire new employees and decide their salaries too. Here you will need to consider the tax part too.
Take care of the taxes that apply to your business. Service providers have to pay Service Tax; traders have to pay Sales Tax and manufacturers have to take care of Excise. Failing to do so might result in high penalties or government punishments.
You can keep evolving your bookkeeping methodologies as and when you gain some experience in this field.
There will be times when you will need to hire an expert. There are some accounting firms in the market that can help you with the expert advice.
The Bottom Line
It is important to prioritize product growth, but at the same time, you need to invest some time in strengthening your foundations too. Accounting is a crucial element for your business’s growth, make sure you give it an appropriate amount of attention.