Let’s say you’ve gone skiing. You’re sweeping across the slopes and you look awesome. Everyone is telling you how great you’re doing, and it feels amazing. It feels so good you decide to hit a double black diamond. You’ve never done it before, but you know the basics of skiing: boots on feet, skis on boots, snow on skis and keep moving. How hard can it be? You take off at the summit and before long you realize that not only are you totally unprepared, nobody knows you’re about to fail until you wipe out; and you do. You wipe out so hard your skis, boots, poles are everywhere. Total yard sale.
Accounting for your small business is no different. You start off with an idea, you incorporate, you design your business cards and your site, and you start meeting people. You even start making some money. Everything is great until; and that “until” can be anything. Until you realize you forgot to charge tax, until you realize you are spending more than you’re making, until you want to save more of what you’re making. It’s a financial yard sale, only this time nobody can see it from the outside.
This is why setting up an accounting system in your new business is so important. Before you even start generating profits, you incur tax-deductible expenses (meals, coffee, mileage, office supplies, cheques for bank accounts) and having someone there to help you will make running your business much easier. Moreover, having somebody there to set up a budget and prepare projections helps you in your own assessment, but it also encourages potential partners or lenders to have faith in your operation.
Put all of these ideas into practice by setting up a Chart of Accounts. It provides the framework for your accounting system, and customizing it ensures you are always at the peak of your business performance.
If you haven’t done this already, that’s ok. Grab your poles, put your skis back on and keep moving: preferably to an accredited accountant or bookkeeper as soon as possible or contact us for your free consultation.