Accountant Kym Nitschke says company founders need to get the financial foundations right from day one.
In the early stages of building a business, owners are juggling a lot of balls in the air; cashflow, tech development, growth, hiring talent, finding premises, customer feedback … the list is endless.
Often, accounting and finance fundamentals are the last on the last thing on a founder’s mind. But this is foundational to the success of a startup, and as your company starts to grow, you’ll be thankful you made these smart moves.
Here’s some key considerations.
Begin building with your why
Before you hit the ground running, workshop your why. Your startup’s vision and purpose. It is important to be really clear on this for the general advancement of the business, but also your company finances.
When the ‘why’ is clear, it will be far easier to set measurable targets and budget accordingly.
When tough decisions surface or financial pressures arise, it’ll be your why that brings you back to course.
Don’t mix personal and business expenses
In the beginning, it may seem easy to mentally keep track of different expenses, but as your business expands, it’ll become increasingly difficult to remember what’s what.
Setting up a business bank account is the first step to keeping your personal and business finances separate. These days, banks offer a plethora of business banking options tailored to each stage of a company’s journey.
Founders will often pay out of pocket for the early costs of setting up and launching their company. You must keep track of this, perhaps through accounting software such as Xero, to ensure this is recognised ‘on the books’ while also enabling the company to reimburse you when more money flows in.
The bottom line is, split your finances — your accountant will thank you for it.
Organise your financial admin
Administrative tasks have a habit of sneaking up on you. Before you realise it, you are knee-deep in receipts and statements lost in email threads. And that doesn’t even take into account the unpaid invoices you need to follow up on.
When you have so much important work to do, this financial admin can become a massive time and growth killer.
Strict administrative processes and a robust accounting system helps keep your books in check.
Invest in financial support
When you’ve got a lean budget, investing in financial support might not be high on your list. But it will pay off, big time.
With the support of an experienced accountant, you’ll ensure that your company is set up effectively – allowing for things like equity arrangements with co-founders and key staff, structures for raising capital and tax effective pathways to exit.
For the day to day, support with bookkeeping will keep you focused on your most important tasks, while also ensuring you remain compliant with the Australian Tax Office.
You’ll save countless hours and avoid the many mistakes made by founders early on.
Coupled with the support of a great accountant is software. Platforms such as Xero will streamline your financial admin, integrate with your accountant’s work flow, as scale with your business as it grows.
Find the right support
Not all accountants are created equal. You want to work with an accountant and firm that has significant experience working with new businesses and startups, and understands the unique needs of founders. This type of accountant will know all of the risks but also the opportunities that might be available, depending on your circumstances.
Set up your startup for success from day one
At Nitschke Nancarrow, we love working with founders and helping them build great businesses.
Let’s talk about your needs. Contact us.
The information contained on this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.
Taxation, legal and other matters referred to on this website are of a general nature only and are based on Nitschke Nancarrow’s interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.
Nitschke Nancarrow specialises in accounting, tax and financial advice for superannuation. Contact us now for a no obligations discussion about your needs.Tags: startup