What you need to know about bookkeeping for startups
Running a startup looks so easy on TV, doesn’t it? You come in and pitch an investor on your new product or service, and boom — you’re now a multi-millionaire living in Silicon Valley. But where’s the accountant? Who keeps track of the bookkeeping? Nobody really knows or cares on the set of a TV show.
Unfortunately, your real life startup doesn’t usually work that way. Someone needs to keep track of your startup’s financial activity at all times. Whether that’s a CFO or a designated controller, bookkeeping is an integral piece of any growing startup.
But what does bookkeeping for startups actually entail? How do you know if you’re on the right track? It all starts with understanding what bookkeeping is and how it applies to your startup. We’re here to help with that. We’re going to tell you how bookkeeping for startups works so you can work towards ensuring long-term financial success for your blossoming venture.
What is Bookkeeping?
A lot of people get confused about bookkeeping and often lump it together alongside accounting. While you could probably call them close cousins, they’re not the same thing. In the most basic terms, accounting is the interpretation of financial records while bookkeeping deals with tracking financial records.
Bookkeeping is designed to keep track of all your startup’s financial records. This can mean everything from income and expenses all the way down to employee payroll. It’s a comprehensive outlook into your startup’s entire financial makeup.
The real core of bookkeeping comes down to accounts receivable (income) and accounts payable (expenses). This basically translates into all the money you earn versus all the money you pay. These are the two most important aspects of your finances that a bookkeeper will keep tabs on.
Why is Bookkeeping Important for Startups?
The main objective of bookkeeping is to give you the best possible understanding of your startup’s financial situation. Consistent bookkeeping will help you identify where your startup is spending too much money and even when there’s an opportunity to spend more on necessary business expenses.
Especially when you consider that running out of cash is one of the biggest reasons startups fail — the need for strong bookkeeping is pressing. Having a great product or service is only one part of the equation when it comes to running a successful startup. The very best have airtight bookkeeping in place to avoid a situation where they’re gaining market momentum, when suddenly, they’re out of money.
How to Find the Right Bookkeeping Services
There are plenty of options when it comes to finding bookkeeping services. Don’t be fooled, though — not all these options are viable. If you’re a startup, you need bookkeepers who understand all the intricacies and nuances of that world. Startups function in a very different way to large corporate entities, and your bookkeeping services should reflect that.
Whether you’re looking for someone to handle your startup’s day-to-day bookkeeping needs or build a long-term financial strategy, Virtual CFO has you covered. Our goal is help make your startup a financial success, and we have the skills and experience to do just that. Get in touch with us for more information about how we can help your startup.