What Is Accounting and How Important is it for Start-up Businesses?

What Is Accounting and How Important is it for Start-up Businesses? Gallagher Keane Chartered Accountants
Business / Cloud Accounting / Start-Up

What Is Accounting and How Important is it for Start-up Businesses?

Start-Up Businesses Require Solid Accounting Practises in Order to Gain an Accurate Picture of Financial Health

A start-up business requires solid accounting practises in order to allow founders, business leaders and financial managers to gain real-time visibility to an accurate picture of its financial health. The unpredictable nature of start-up businesses means that having accurate accounting information is vital, to allow for thorough analysis. This helps identify opportunities for growth and improvement which allows for strategic decision making.  

Accounting for Start-Ups

Accounting is the method by which your business records, organise, and understand its financial information. Accounting processes include reporting, summarizing, analysing, and projecting business transactions using financial statements. Financial statements include your financial transactions over an accounting period and provide insight into your business cash flow and operation’s status. This gives you an accurate picture of your financial health, for internal and external stakeholders. This provides entrepreneurs with a clear picture of their business’ level of success. Start-ups need to keep accurate records of all financial statements for tax and legal purposes, thus having a solid accounting system in place is important. A strong accountant will help you stay organised, determine business profitability, and saves you time and money.  

Types of Accounting for Start-Up Businesses 

There are many accounting systems available for start-up businesses. Here are some to give you a better indication as to what would work best for your business. 

Financial Accounting

This type of accounting summarizes financial transactions from a business’ accounting period into financial statements such as profit and loss statements, cash flow statements and balance sheets. These statements are usually shared by start-up businesses with key external stakeholders such as investors and boards of directors. 

Management Accounting

Using the same accounting processes as financial accounting, management accounting records financial information intended solely for internal stakeholders. This helps start-up businesses make informed decisions to align with their business goals. 

Cost Accounting

This type of accounting records financial information related to the costs for producing your service(s) or product(s). Start-ups use this information to prepare budgets, forecasts, and analyse the performance of the business.

Why Accounting Is Important for Start-Up Businesses

Planning for Growth

For your start-up business to grow, you are likely to need capital. Having professionally prepared financial statements and projections can help your start up convince potential investors and business leaders that your business will be profitable and can offer them a good return on investment.

Raise Funding from Investors or Selling Your Business

If you are looking to take out a business loan, raise venture capital or sell your business ensuring your financial reports are prepared in line with the relevant accounting standards (FRS 102 in Ireland and the UK) is a pre-requisite.

Paying Taxes

Working with a team of professional accountants ensure your start-up business file tax returns correctly and on time. Expert accountants can also help you maximise your tax deduction opportunities. This offers your start-up opportunity to save money and avoid late fees. 

Remain Compliant 

Use of professional expertise will ensure your business remains compliant and avoid any unnecessary fees. Working with an accountant will help you ensure your accounting system is compliant as you prepare to scale your business in size.

Why Work with Gallagher Keane Chartered Accountants?

Gallagher Keane provide professional accountingtax, and financial advice to many start-up businesses. This helps them make informed business decisions to reach their goals. Gallagher Keane provides cloud accounting services to clients, giving start-ups a modern accounting solution.  

Get In Touch

If you are interested in finding out how we can help your business, please book a no obligation call.