24 Sep The top three accounting problems facing business start-ups
Launching a new business is an exciting venture. However, running a successful start-up has proven difficult for many entrepreneurs. 30% of business start-ups fail within the first two years, only a few grow to dominate their niche and become established brands.
Financial problems are identified as the number one cause of start-up failures. Here is a more in-depth look at some of the common financial and accounting problems that start-ups face and cannot resolve.
1) Keeping track of cash flow
Most startups launch with a limited cash supply hoping to fill in the financial gaps through rapid sales and investor funding. Things don’t always work out as planned, and without a fall-back strategy, it becomes difficult to maintain a healthy cash flow. This leads to poor or inaccurate tracking of revenue and expenses, which ruins the company’s budget and financial projections.
2) Handling taxes
Business tax laws are a complicated subject, especially for start-ups. Tax regulations and requirements vary widely depending on several factors. Start-ups usually lack the knowledge and experience to comply with tax laws. For this reason, they end up paying more tax than they should or getting in trouble with authorities over unmet requirements. Either way, the company could lose money through unfair taxation, legal fees, and fines.
3) Managing payroll
Establishing and managing an effective payroll is a big challenge for start-ups. Working out fair employees’ compensation is a minefield of complicated legal and social issues. Entrepreneurs have to figure out how much they can actually afford to pay their workers, factor in PAYE, and take care of allowances and deductions. Doing all that while adhering to strict legal guidelines and tending to a business in its infancy is no easy task.
How to solve accounting problems
The leading cause of accounting problems, apart from not having enough funds at the start, is the lack of proficient accounting skills. Enlisting an experienced accountant early on in the start-up helps the business navigate financial hurdles. An accountant also helps the founders and stakeholder see the bigger picture of the company’s financial situation and future.
If you are having trouble finding professional accounting assistance for your business, look no further than SQK Accountancy. We provide accounting support to small businesses and start-ups. Let our team of experts take care of your accounting issues from payroll to taxation.
Why not get in touch today, to see how we can help you with your accounting needs.