4 Startup Accounting Tips for the New Entrepreneur

Recently named as 1 of 3 Alternative Tech Startup Cities by Entrepreneur.com, Reno, Nev. has rapidly transformed throughout the past decade to transcend its former personality of a shadier Las Vegas. Therefore, it only seemed fitting that in the midst of our hometown’s up and coming identity transformation, VAST would provide some startup accounting tips tailored for entrepreneurs. While entrepreneurs may be eager, ambitious and talented, most often they are not experienced accountants. Here are 4 simple yet effective startup accounting tips for new entrepreneurs.

Plan for Long-Term Expenses

Forecasting future expenses can be difficult; however, it’s really important. More often than not, they’re also really expensive. It can be nearly impossible to account for technology upgrades, new equipment and new employees without budgeting for them from the beginning.

Beware

Money is incredibly valuable when first beginning operations. So, when that money is stolen or misused, the repercussions of not acting fast can be detrimental to your business. Always check your financial statements for any type of fraudulent activity and act immediately in the event you find something out of place.

 

Track Your Marketing Efforts

It can be easy to gauge whether your startup is profitable, but it can be frustrating and difficult to determine which marketing strategies are worth continued investment or a kick to the can. Keeping track of online interactions through Google Analytics and social media software can help you determine what is actually worth spending your money on.

 

Use a Professional

This may be the most important startup accounting tip for entrepreneurs. While business is growing and profitable, convert your financial accounting to a professional team. The cost of employing an accounting service is far more affordable than many would think, and the benefit far outweighs the cost. Eventually the time will come to hand over the hat of CFO; do it before it’s too late.

VAST works with professionals to let them do what they do best: running their small business, and that includes letting entrepreneurs keep on dreaming of the next new thing. Take these startup accounting tips for entrepreneurs and continue making Reno the Biggest Little Startup City it has the potential to be.

Tips for Starting an Entity in Nevada and Beyond

The time has finally come. You’ve summoned your inner entrepreneur. You’ve “stuck it to the man” like you’ve been telling your spouse and/or best friend you would for the past few years. You’re ready get rolling down the path of starting your own business, and … you feel completely lost.

Fear not! Many have walked this road before, and while it may seem daunting … even impossible at times, you can conquer the struggles of starting your entity in Nevada. Here’s how.

“Fail to plan and plan to fail.” Yes, it may sound cliché, but this statement rings especially true when considering starting an entity in Nevada. From the initial stages of conceptual design to physically writing your business plan, planning is an absolute necessity to starting your business. Unfortunately, there’s no room for that “sway with the wind and follow my heart” mumbo-jumbo here. You can follow your heart wherever it goes, just have a plan when you do so.

After creating your business plan the time comes to register your business with the state. Visiting the Nevada Silver Flume website (a government website for starting new businesses) will prompt you along a series of different questions, such as what type of business you are starting, your business name, a description of your new entity in Nevada and more.

Your new (hopefully soon to be Fortune 500) company is registered, and it’s time to get cracking on the fun stuff: federal and state licenses and registrations. Again, check with the Nevada Secretary of State website for information on which licenses you will need to operate your business legally. Failing to research exactly which documentation you will need can cost you a lot of money in the future, so doing it right the first time is imperative. Researching business practices and state laws are also important during this time, so don’t forget about those either.

Once you’ve officially registered and licensed your business, let the financing begin. No stage is more important than the other when starting an entity in Nevada; however, this must be done correctly and effectively. From choosing an accountant (such as VAST) or establishing company operating plans and bank accounts, how you handle the financial side of starting your business may determine how it ends as well. Set yourself up for success and consult a professional.

While choosing a location, equipment and employees requires insight specific to each operation, you’ve already began to walk on the racetrack of small-business ownership. For more information on the steps listed above, you can also visit the U.S. Small Business Administration Website. As always, feel free to consult VAST with any questions regarding your entrepreneurial endeavors to learn how we can assist you when starting an entity in Nevada and beyond.

Can Your Company Afford You?

When you embark on the adventure of entrepreneurship, there will inevitably be ups and downs for you financially.  At the end of the day, you pay employees, vendors and others and then you receive a paycheck.  Therefore, there are three numbers you need to have a solid understanding of.  I call them Survival, Comfortable and Ultimate. Survival is your worst case scenario.

It is the absolute bear minimum your company needs to pay you in order for you to survive and pay your basic bills.  It is very important to note though that the time you spend in Survival mode should be minimal.  If your company cannot pay you your Survival number other than in rare instances of growth or extra investment, then the hard answer might be that your company cannot afford you.

Once you get a handle on the answer to that all important question, then there are two additional levels of entrepreneurial compensation.

Comfortable is a step up from Survival.

At this level, you are taking a consistent salary, saving for retirement and taking vacations.  This is your Survival number plus the cost to do those things.  Comfortable comes with a different thought pattern.  At this level, you are supporting yourself and providing for your family, but you have the luxury of making decisions.  Maybe you can't quite get to the high end of Comfortable earnings but your passion for what you are doing makes it worth it to you.  That is your decision to make.

Ultimate is the highest number you can imagine your company providing for you.  

It's tempting to say "the sky is the limit", but try to put an actual number on this.  Goals are much more attainable if they are quantified.  This is a fun number to think about as a business owner...even if you are devoted to what you are doing and not in it for the money, passion can fuel the financial success of your company faster than anything else you can inject into it making Ultimate that much more attainable!

By knowing these three numbers, you can ensure that you know first and foremost whether your company can afford you.  Then you can build these numbers into other tools to fuel your growth likes budgets, cash flows forecasts and more.

To learn more about how to calculate these three metrics and tie them into your company's financial success, check out Tanya's on demand course for entrepreneurs - The VAST:Track Guide to Startup Success. Click here to learn more.