Bookkeeping for Startups: Everything You Need to Know

Growth is what matters to people who think about their startups. However, an accurate financial record is equally important. Many businessmen view bookkeeping as a hectic, boring, and less appealing activity. Some even consider it a distracting factor from their “real work”. This is a major mistake since only precise bookkeeping provides the necessary financial visibility, transparency, and control over all of a startup’s processes and flows. That is why it is extremely important to understand how correct financial recording influences startup growth from day one.

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What is the Role of a Bookkeeper?

Generally speaking, a bookkeeper is a professional whose task is to  maintain accurate financial (startup books). This position implies managing your bookkeeping systems, keeping your general ledger up to date by recording all financial transactions. Because of its sophisticated nature, bookkeeping is a task that requires a great share of knowledge, precision and experience.

Making New Growth Opportunities

Meticulous financial approaches are not always visible in the beginning, yet it’s only a matter of time before inaccurate accounting will prevent a company from growing. Thus, misleading financial reporting and a startup’s inability to comply with obligatory standards and regulations inevitably results in failures that strike your dreams. On the other hand, precise, accurate, and disciplined bookkeeping can save you from failure. Furthermore, it provides the desired image for your startup as a responsible and process-dedicated entity. In turn, a positive business image can open doors for ongoing investments, grant programs, and worthwhile business partnerships.

Tracing Back Your Cash Flow Activity

Unlike established corporations, startups are vulnerable financially. Without any sufficient revenue buffer or equity, making financial mistakes can jeopardize the entire enterprise. On the other hand, accurately monitoring every transaction including all inflows, outflows, credit, and expenses provides startups with operational stability. Knowing the precise cash position at all times supports certainty in decision making and forecasting. Moreover, detailed bookkeeping allows quick pivots if the numbers start trending in the wrong direction.

Inspire Investor Confidence

Speaking of growth capital, it must be mentioned that young organizations rely heavily on equity investor funding. Under this framework, it is natural for investors to scrutinize financial reporting closely during due diligence before signing a deal. As mentioned above, impeccable bookkeeping shows, first and foremost, your financial responsibility and transparency to inspire investor confidence in your undertakings. Concurrently, it streamlines fundraising when all records are readily available for quick review.

Uncovering  Hidden Cost Drivers

Large costs like payroll, rent and inventory usually get the most attention from startup founders. Yet, a swarm of smaller expenses can fall through the cracks during the hectic first days of a startup. From random software subscriptions to overbilling vendors to unmonitored ad spend hidden costs may complicate startup financing. Similarly, different product offerings will likely generate significantly different revenue levels that are impossible to optimize without tracking every transaction. Full-scale monitoring of financial activity lets startups uncover hidden cost drivers and optimize both spending and profit gains.

Automation and Efficiency

Financial reporting touches on different aspects of a startup’s activities, resulting in the integration of varied data under standardized reporting procedures. Gathering all the findings can be tricky, becoming incredibly cumbersome as the number of financial operations increases. In fact, your bookkeeper has to build an effective and automated system, comprising both human involvement and machine tools, that seamlessly integrates with your business bank accounts and payment processes. In this respect, simply acquiring an automated accounting platform is not enough; bookkeeping experience and supervision play a crucial role in enabling effective reporting and data processing.

As a difficult and time consuming task, bookkeeping can be extremely challenging for developing organizations in the early stages of their development. That is why ERB sees particular importance in providing dedicated financial services for those who strive to have their records completed efficiently and on time. Entrust all your mind-racking books to us and enjoy the results without being distracted from your main business activities. Our professionals will accomplish all the tasks that must be done by a startup’s bookkeeper, so that you never lose financial visibility.