People may naturally be more excited about actually starting to build a business and start earning a profit, but making the wrong financial choices in the first few days, weeks and months of your business can have a long-term impact on your income.
To get help with starting your business off on the right foot, talk to an accountant before making any financial or business structuring decision. Some very important reasons to do this include:
- Avoid Mingling Funds – Mixing your business and personal accounts, business and personal credit cards or debit cards, or otherwise having accounts that are used for multiple purposes can become a serious tax liability and issue. Always set up separate business accounts and avoid mixing and mingling.
- Personal Guarantees – Often a business owner may use a personal guarantee on a business loan. This is a potentially risky consideration as you may be using your home, personal vehicle, or other types of assets as collateral for a business that may or may not be successful. There may be other options in funding to consider to avoid putting your personal assets on the line.
- No Account Receivables System – No matter what a great job your business is doing if you don't have an accounts receivable system in place that is easy to use and efficient, you are going to have challenges in invoicing, collecting, and record keeping. This can end up in challenges with delayed invoicing, missed invoices, customer dissatisfaction, and more time spent in trying to collect overdue accounts.
- Use Technology – There are simple programs offered through several apps and accounting programs that allow you to capture copies of receipts at the time they are issued. When these systems allow you to correlate this with your expense account program, you have a very effective way of continually staying on top of spending as well as preparing for tax time.
- Not Meeting Regularly – If you are a small business, it is a good idea to meet with your accountant at least once in between tax seasons. This will help you to plan effectively for the next few months or years, ensuring you stay within your business finance plan.
Find an accountant you trust, who has a schedule that works for your business, and who is willing to work with a startup company to make the most of their financial opportunities.