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Starting a business? Don’t forget these critical accounting elements!

by Brett Backues on July 27, 2016
Starting a business? Don’t forget these critical accounting elements!
 
Making the leap into becoming a small business owner is an exciting one, but it often comes with unexpected complications and responsibilities. People who take the time to prepare and plan ahead are the ones who set themselves up for success in the business world. The accounting and financial aspects of entrepreneurship are crucial in determining whether your new venture will sink or float, so be sure to talk with a qualified CPA about these five things:
 
1. Accounts receivable/collections
 
People go into business to make money, and the cornerstone of that income is in accounts receivable. Having a solid system to manage invoices, payment terms and plans, and strategies for successful collection practices is critical for your own financial salience.
 
2. Cash flow
 
As your company gets off the ground, it’s important to have a trained eye keeping track of your cash flow, or the amount of liquid assets moving in and out of your business. If you want to grow and succeed, you’ll want to see that your cash flow is in the positive.
 
3. Managing paperwork
 
Even small businesses require a lot of paperwork to stay in compliance with tax law and other industry standards, and this can be overwhelming to manage on your own. A licensed CPA firm can help you handle the flux of files, invoices, statements, and other documents.
 
4. Closing the books each month
 
It may be tempting to simply jump from one month to the next without taking a hard look at your financial balance, but that can become a bad habit. Each monthly cycle offers an opportunity to close the books and know where you stand.
 
5. Managing payroll
 
Most businesses will hire employees or contract with other professionals, and this process can be tricky, in terms of payment, insurance, taxes, and more. Work with a local accountant to keep these things in order, and ensure your staff gets paid correctly and on time. 
 
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