Take a look around your town and you’ll notice a few small businesses starting to plant roots in the economy. Entrepreneurship is a huge trend right now and we’re honored to be a boutique CPA firm in New York City right in the middle of it all. Sadly, a common statistic is that most startups are no longer in business after five years. One reason is that these businesses did not include in their planning phase a focus on costs, realistic budgets, and financial projections.
Aside from a great product and stellar client service, how can you ensure that your start-up business will succeed? You must have a complete understanding of the proper accounting for your business activities during startup years. Managing your own accounting system incorrectly can hurt your business not only now, but also in the long-term.
When you start a business, there are many actions you need to take and systems you need to set up to create the foundation for a successful business. Below are four essential things the right CPA can do to help your startup business succeed.
Starting a new business is exciting, empowering, and exhausting! Most business owners are enthusiastic about performing the primary function of the business, it’s the administrative requirements of licensing and registration, taxes, payroll, accounting, and structural planning, that they quickly find overwhelming.
Having a professional by your side from start-up to maturity is exactly what your new business needs to succeed. At AHAD & CO, we navigate you through IRS tax complexities and ensure you’re making the best financial decision all around. We provide advise on:
- Startup Business Planning
- Profitability Analysis
- Business Acquisition
- Business Divesting
- Accounting Software Implementation
- Human Resource Consulting
- Budgets and Forecasting
- Business Strategy Planning
Select the Right Tax Structure
A CPA can help determine the best business structure (i.e., sole proprietorship, LLC, corporation, partnership) for your situation. Once you choose a business entity, it’s difficult to reverse, so it’s important to get this decision right the first time. The right entity for you depends on how you expect to run your business. Your CPA will ask questions such as:
- Do you need liability protection?
- Will you have business partners?
- Can you budget for estimated taxes?
After considering these points and many others, your CPA can help you determine how to structure your business.
Allocate Funds Appropriately
To start any business, you need adequate capital to get yourself off the ground. Startup costs vary from industry to industry, and an experienced CPA can help with determining an average amount based on your unique situation. According to a recent study, 82 percent of businesses fail due to cash flow problems. CPAs are skilled at creating tailored business plans that contain financial plans that include items like a balance sheet, sale forecast, profits and loss statement, and cash flow statement. This financial statement helps determine how much funding you need to get started and stay afloat.
Bookkeeping is a core part of managing your finances and ultimately promoting the growth and success of your business. Your CPA can set up a system that’s organized and easy to use. Over the years, bookkeeping tasks have become much more automated, making outsourcing to an online CPA professional easier than ever. CPAs do more detailed and thorough analysis than most bookkeeping firms and they advise on tax and financial matters.
Find a CPA for Your Startup
Working with a CPA can help your business avoid several issues in its early years. As most startups build their business from the ground up, they inevitably bring in outside professionals to assist in building their business. Whether it is a lawyer to draft up bylaws or a designer to create a website, crafting together a group of outside advisers is necessary and critical to running your startup. One of those key advisers you should bring in is a CPA.
If your startup business needs business services, speak with one of our CPAs today. Contact us online today, plus we offer a free consultation for first-time clients!