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Starting a business is exciting, but managing your finances effectively is key to long-term success. In this guide, we’ll walk you through five essential steps to master startup accounting, from keeping proper records to leveraging accounting tools and professional services.
What is Accounting?
Accounting is the process of tracking money as it moves in and out of your business. While part of it involves reporting taxes, the primary goal is to help you understand and manage your finances better.
Step 1: Start with Bookkeeping for Startup Accounting
Every successful business begins with accurate bookkeeping, which is the foundation of startup accounting. Keeping records of your transactions ensures you have a clear view of your income versus expenses. Open a dedicated business bank account and save all receipts—this simple practice can make your tax filings and financial reporting much easier.
Good bookkeeping ensures you can track whether your business is profitable, plan for upcoming expenses, and maintain compliance with tax requirements, which are all vital components of effective startup accounting..
Step 2: Create Accounting Reports to Manage Startup Accounting
Relying on instinct isn’t enough when it comes to making strategic decisions. With regular accounting reports, you can monitor sales, track profitability, and plan your cash flow effectively. These reports are essential tools for successful startup accounting because they provide the data-driven insights you need to grow your business.
Numbers tell a story about your business. Use them to make informed decisions. Check key numbers weekly, such as sales and outstanding invoices, and review monthly metrics like budget vs. actuals, liabilities, and year-over-year performance. This habit ensures your startup accounting practices stay organized and efficient.
What to check weekly:
Sales: Monitor revenue and related costs.
Profit: Ensure you’re making money after expenses.
Wages: Keep staff costs under control.
Money owed to you: Stay on top of unpaid invoices.
What to check monthly:
Budget vs. actuals.
Liabilities like loans and bills.
Cost of goods sold.
Performance compared to last year.
Step 3: Taxes: Don’t Let Them Trip You Up
Taxes are a critical part of running a business, and managing them properly is a cornerstone of startup accounting. Familiarize yourself with key taxes like GST, corporate income tax, and employee-related taxes. Properly filed taxes prevent costly penalties and ensure your business remains compliant with government regulations.
Taxes are unavoidable but manageable. The three most common forms are:
Income tax: Pay a portion of profits.
GST: Add and remit sales tax to the government.
Employee-related taxes: Deduct and submit taxes from employee wages.
Filing Corporate Taxes in Singapore:
ECI: Estimated Chargeable Income filed with IRAS.
Form C or C-S: Final declaration of company income with supporting documents.
Step 4: Use Accounting Tools to Simplify Startup Accounting
Time is money, and accounting tools like Xero are game-changers for efficient startup accounting. With features such as real-time dashboards, automated invoicing, and expense tracking, these tools help you save time and reduce errors.
Implementing technology in your startup accounting process allows you to focus on scaling your business while ensuring that your financial records are accurate and up to date.
Step 5: Get Professional Support for Your Startup Accounting
As your business grows, managing accounts can become overwhelming. Partnering with professional accountants ensures your startup accounting processes remain accurate and compliant. With expert support, you can focus on strategic decisions while leaving bookkeeping, tax filing, and accounting software setup to professionals.
At KBW Group, we specialize in supporting startups with tailored startup accounting services, ensuring your business thrives from day one.
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