Accounting Tips For New Businesses

Last Updated: 

January 4, 2024

Accounting Tips For New Businesses to Maximise Profits

When we start up a new business venture there will always be a huge optimism which we have and this can cloud our view to some of the more serious things to consider about opening up an empire. For example accounting is a skill which you will need to master when you start a new business and it is a skill which can take a lot of time and work to master. Here are some of our quick tips for beginners to make accounting easier.

Key Takeaways on Accounting Tips for New Businesses:

  • Learn the Terms: As a new business owner, familiarise yourself with financial jargon such as dividends, the ebitda formula, net loss, and income. Consider taking a beginner's course or doing thorough research to understand these terms.
  • Use a Bookkeeper: Employ a bookkeeper, either a person or software, to record every financial transaction. This tool helps track expenditures and assess areas of improvement in your accounts.
  • Be Strict with Client Payments: Set clear payment deadlines and provide warnings to clients. Establishing firm payment policies from the start ensures consistent cash flow and prevents clients from taking advantage.
  • Calculate Your Minimum Profit: When assessing monthly profits, base calculations on the minimum expected profit rather than the maximum. This approach provides a more realistic view and avoids potential discrepancies in records.
  • Save Money Everywhere: Adopt cost-saving measures in all business operations. Whether it's opting for digital documents over printing or buying second-hand office furniture, small savings can significantly impact overall profitability.

In essence, mastering accounting basics, being diligent with financial records, and adopting cost-saving measures are crucial for new businesses to ensure financial stability and growth.

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Learn the Terms

One of the main things which you will likely notice as you start delving into the financial world is that there are a lot of terms and jargon which you will struggle to learn and this will take up a lot of your time as you figure out what it all means. There’s things like dividends, the ebitda formula, net loss and income and lots more which you need to take the time to read up on and perfect during your first few months of business. Make sure to do your research and maybe even take a beginners course for extra guidance.

Use a Bookkeeper

A bookkeeper will either be a person or a piece of software which you can use to record every single penny in and out of the business and this can be used as a way to make your business easier and allow you to see where you might improve with your accounts over time. You can track every little expenditure in this and it will allow you to look back after a bad month to see what it was that caused this issue. It is an essential tool and one which you definitely need.

As your business grows, you might find the need for more specialised financial expertise without the cost of a full-time CFO. This is where fractional accounting can be a game-changer. By leveraging the expertise of a fractional CFO, you can get high-level financial insights tailored for your business without the full-time commitment.

Be Strict with Client Payments

If you want to make sure that your business grows and stays as profitable as possible throughout the years you will want to make sure that you are strict with your clients and make sure that you give them a deadline and warnings for their payment of your products or services. If you don’t set a strict president straight away this can affect your ability to be successful as a business and your profits and suffer as a result. Be firm and make sure that your clients know you mean business otherwise they will walk all over you.

Calculate your Minimum Profit

When you are calculating your profits for the month, make sure that you calculate in terms of the minimum rather than the maximum. The reason for this is that things can change through a month and if you have calculated the maximum and it doesn’t add up, you are losing out and your records will be faulty. Also it is always a nice bonus if you make more than you thought you were going to!

Save Money Everywhere and Anywhere

This one should be really obvious to you but we will state it anyway: make sure you save money everywhere you possibly can for the best business model and profits. If you can avoid printing things out, avoid it. If you can buy second hand furniture for the office, buy it. There are so many small changes you can make in and around the office to save money and this will all help you to make more profit.

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