Why Accounting is the First Thing Your Startup Should Outsource
Avoid frustration and potential problems with your startup by outsourcing your accounting.
You’re excited about your startup business and eager to get it going. I’ve been there! Like most fresh new businesses, you’re probably feeling cautious about spending money on anything other than the essentials.
I want to talk to you today about why outsourcing your accounting is a top priority and, in fact, could easily save you money.
I talk all the time with startup founders about their new venture and what they need to do to be successful. They ask, “can’t I just do it myself? I know how to keep a checking account.”
Here’s the thing: we’ve all heard the phrase “failure to plan is planning to fail” and that couldn’t be more true when it comes to managing your startup finances.
Here are 6 reasons I always encourage startups to outsource their accounting first thing:
Financial planning
I’m assuming that you didn’t just start up your business without any kind of plan in place or without writing any of your ideas down, right? So why would you not treat your finances the same way? If you’re only reviewing your daily balance in your business checking account, you’re missing the big picture.
Using that method of financial tracking will not give you the information you need to make day-to-day decisions because it doesn’t help you track what expenses are coming or what might still be outstanding.
An accountant or professional bookkeeper will help maintain up-to-date and accurate records so you always know your company’s true financial picture.
Reconciling statements
But Wendy, why should I care about paperwork? Doesn’t the bank track stuff for me?
No, not in the way that you need.
Another part of effective financial management is reconciling statements both each month and comparing month-to-month. Hiring a bookkeeper to do this will ensure that the records are accurate and that the numbers are entered in Quickbooks in the right categories.
About those Quickbooks records…
Bookkeeping is a skill that people like me go to college and get degrees for. It should not be left to someone “who is good with numbers” or, worse, someone who just wants to get that part of the business done and over with.
Quickbooks is an amazing tool that will save you if you manage it correctly, but not managing Quickbooks correctly will cause problems super quick. Not only will it not help your decision making, you will not be prepared for potential investors who need a clear financial picture of your startup.
Do it right the first time
Improperly categorized financial information can become costly and also inhibits your ability to make sound decisions. You wouldn’t believe how much time and money goes into hiring someone to fix your Quickbooks records if you don’t start doing it right from the get-go! I’ve spent countless hours fixing Quickbooks records for clients who thought they could handle it on their own. I’d much rather help you save money and be successful by managing your books from the beginning.
Employee payroll is trickier than you think
I know many startups run lean and hire as few people as possible, but many startups that I work with do need employees to make their business work. Employee payroll, taxes, and other records are incredibly complicated. I don’t like scaring my clients, but here it’s necessary.
If you do not keep correct employee payroll records or if you do not submit the right taxes and other information to the government, you will incur penalties and cause many other problems for your business. Never try to do your own payroll. Ever.
Tell your money where to go
I want to close with one of my favorite quotes from Dave Ramsey: “A budget is telling your money where to go, instead of wondering where it went.”
By hiring a professional bookkeeper for your startup, you will be doing just that.
How can I help? Give me a call if you are a startup or are thinking about starting a business. Let me help you be a success.