If you have a startup business or you are in the process of setting up a new business then it is important that you integrate accounting in your processes from the first day. This helps your business maintain accounts of your everyday financial activity. Keeping your accounts on a day-to-day business helps you monitor your new business more closely and more effectively.
Many entrepreneurs make the folly of thinking about accounting only at the end of a financial quarter or year. It is advisable that the services of a competent accountant who maintains the books of your business should be taken right from the beginning of your business. Hiring a person who knows accounting is not very expensive. It is also advisable that the business should make use of accounting software or a cloud based accounting software for managing its accounting.If you are an entrepreneur (or intend to be one) it is necessary that you understand the basics of accounting. It will help you in understanding the financial aspect of your business. You should be able to understand the three basic financial statements that are absolutely necessary for any business worth its salt. These financial statements are: profit & loss statement, balance sheet and cash flow statement. There are many training consultancies in India that conduct very short duration accounting courses for entrepreneurs.
A few other things that an entrepreneur needs to keep in mind. Firstly, the accounts of the business should be kept separate from the personal accounts of the owner or entrepreneur. Secondly, while raising financing for the business, the entrepreneur should tap the entire gamut of financing sources available. With the advent of new financing avenues like crowd-funding, the financing sources available for an entrepreneur have increased substantially. By exploring all the available financing options, an entrepreneur can raise financing for the business at the lowest costs possible and on more favorable terms.
An entrepreneur should understand the difference between profit and cash flows. A company can be profitable on paper but may suffer from poor cash flows. It is therefore necessary that an entrepreneur manages the business in such a way so that it generates enough cash flows to be able to meet its expenditure needs. Better negotiation with customers and suppliers can considerably reduce the cash flow problems of a new business. Negotiation skills are very important if you are an entrepreneur or owner of a new, budding business. Of course understanding of the basics of accounting is equally important!