If you are a Canadian startup, you might know that maintaining your company’s finances is one of the most crucial aspects of owning a business. Doesn’t this make sense because generating revenue and making a profit are the main objectives of a business? Of course, it does. Assessing and maintaining your company’s financial stability regularly is vital, and here’s where appropriate accounting procedures can help.
Most large corporations and well-established mid-sized businesses have well-developed accounting systems in place. They may have worked with outside accounting firms or employed qualified and experienced accountants to achieve that level of sophistication. This might not be the case for a newly established business.
In this blog, we will discuss some typical accounting issues that Canadian startups face and how to deal with them to stay afloat.
Accounting challenges faced by Canadian Startups
Here are the top seven challenges that Canadian Startups face. Take a look here –
1. Dealing with cash flow
Erratic and unpredictable cash flow may be the biggest obstacle a fledgling company will face in its first few years. Keeping track of the money coming in and going out of your organization can be challenging.
Remember that it typically takes businesses between six months and two years to start seeing profits. Therefore, the only option is to exercise patience while attentively managing your cash flow and observing its development over time. An accountant can give you the knowledge you need to handle your money more effectively.
2. Tax Planning
Taxes are very complex to discuss in business, especially when a company starts. There is no one-size-fits-all formula for tax planning and management. Tax requirements and obligations differ from business to business. It is preferable to work with an online accounting firm or an experienced tax consultant to assist you with your taxes.
3. Payroll Administration
Even though a startup often has fewer employees, it still has payroll issues such as inaccurate tax filings, overdue and delayed payments, old and incompatible payroll software, leave tracking and other compliance issues. To reduce problems and enhance accounting, it is critical to establish reliable and efficient payroll systems early on. If you are a startup with trouble with payroll obligations, you can quickly find a solution by outsourcing payroll to outside service providers.
4. Establishing customized revenue agreements
Another potential accounting complication is revenue recognition with clients. Since revenue is crucial for valuation purposes and could affect your valuation at your next round of funding, it is critical to tackling this issue as soon as possible.
Companies looking to implement customized revenue arrangements with consumers should fully understand the complexities of the structure, including the accounting approach, just like with sophisticated financial agreements.
5. Using business accounts for personal expenses
Small enterprises frequently combine their personal and business bank accounts when starting. Combining bank accounts can be troublesome in the long term since you may mix up your cash and miss out on tax benefits, even though this is a common mistake made by startups.
Find a way to set up separate bank accounts for each aspect of your finances as soon as your business gets going, and never combine your personal and business accounts. Blending your financial accounts could quickly become a nightmare if your company is audited.
6. Unexpected Expenses
Unexpected expenses are the most frequent accounting issues brought on by the cumulative effect of all other accounting issues. Running a business is among the most challenging duties since you must handle various matters quickly.
However, when these issues are financial, they can completely derail all your goals and projections. This could result from failing to keep track of all receipts, invoices, or analysis of account payables, as well as disorganized financial data and other factors. Still, it is typical of DIY accounting and a lack of professional assistance.
7. Managing invoices
It might be tedious to handle bills because it requires carefully preparing payment information and soliciting payments from your clients. You will also need to take care of all the account receivables to ensure you are paid. Fortunately, you can access internet accounting tools, or even better, you can engage in a virtual CPA firm.
Hire an online accountant for your startup
Seven problems, one solution – Outsource a bookkeeper and accountant for your startup! No matter the size of the business, accounting is essential. However, as a startup company, you could run into standard accounting issues, including managing cash flow, combining accounts, tax planning, and processing invoices.
If you are a startup and your company is not following sound accounting concepts and procedures, your work may become increasingly difficult. You may promote business growth and outlast your competitors by employing a good accounting strategy and execution.
It will be preferable for your company to engage an online accountant if you are not an expert in business accounting. You can hire an accountant directly as an employee or use the services of an online accounting firm. In either case, the expert you engaged will oversee your company’s finances and assist in its long-term expansion!
So, do startups require outsourced bookkeeping and accounting services to deal with the accounting challenges? YES!
Bronte Bay is a reputed online accounting firm operating completely in the cloud. Over the years, we have assisted several small, medium, and big companies by offering full-service accounting, bookkeeping, accounts payable, payroll management, and tax preparation services.
With the most up-to-date accounting software and tools at our disposal, our skilled accountants at Bronte Bay can offer sound accounting strategy and execution that may help you get the most out of your resources while supporting the successful operation of your company.
Are you prepared to begin?
We can assist Canadian Startups with that to make things good! You may compare our pricing packages at BronteBay in minutes. We offer webinars and one-on-one advisory meetings to suit every business. We can show you the ropes in the right direction. Start with our 30-day free trial to see how you can save!