4 Tips to Overcome Accounting for Tech Startups
For the past decade, big organizations have started hosting tech startup events. These events provide platforms for startups to launch, market, and compete with other startups. However, tech startups continue to the break surface. Once you’re launched, many continue to struggle over the obstacles of staying in the market.
Tech startups bring tech products and services to the market. Supporting and promoting tech startups in the Philippines is important. Startups improve diversity and competition in the market. Increased diversity and competition challenges existing and newly formed businesses to do better. In effect, customers receive better products and services.
Supporting Philippine Tech startups also boosts the presence of Filipino entrepreneurs in the market. Assisting them means aiding fellow Filipinos in reaching their dreams. In this article, we will provide you tips, from an accounting perspective, on how to overcome struggles as a tech startup.
Tech startups aim to penetrate the market before other startups with similar goods or services enter the market. They have to get in the market first and hold the fort. Because of this competitive nature, startup owners have to focus first on product or service development and marketing. In consequence, accounting and finance aspects later create huge problems for the company.
Don’t worry! Here are 4 tips to help entrepreneurs overcome issues in accounting for tech startups.
1. Learn Basic Accounting
Accounting creates a way to translate business conditions into something that can be understood through numbers. If you don’t know what the numbers mean, you may miss red flags that could end your business.
If you are on a tight budget but still confident that you can do it, you should learn basic accounting. Keeping good accounting for tech startups makes it easier when filing for governmental compliance. Further, studying basic accounting for tech startups gives you a better understanding of how income and expenses work. In turn, you can better manage your finances.
2. Keep an Eye on Cash Flows
Startup business owners usually fail to realize that they should keep tight control of their cash flows. Small expenses usually make big dents in the books when added together. Menial expenses like meals and office supplies can empty your wallets without you realizing it. Make a budget and keep a tight record of your expenses.
Actively and reasonably collect your receivables until your customer pays. Nothing’s more frustrating than customers not paying on time. Send invoices immediately after completing service or product delivery. If the issue continues, and especially on big scales, you should probably look into your credit terms. You could lessen the percentage of sales that you allow to be paid on credit.
3. Know Your Tax Obligations
Keep in mind that your tax obligations arise as you start your business. Many entrepreneurs keep the mindset that they will have to mind the taxes later. This would be a very dangerous path.
BIR reports are required monthly, quarterly, and annually, even if the business has started operating with profits or not. Furthermore, late submission of compliance reports charges big penalties. You wouldn’t want penalties piling up before breaking even. Consult with the nearest BIR branches early on and inquire about the compliance you have to periodically perform.
4. Automate Your Accounting Books
Entrepreneurs usually don’t like the accounting part of the business. Accounting means numbers and dealing with numbers is not a favorite task for many. As such, you should try cloud accounting solutions in keeping your books.
Softwares like Quickbooks or Xero provide a user-friendly platform to do accounting for tech startups hassle-free and with fewer complications. Doing cloud accounting updates your record in real-time with no fears of PC or storage crashes. It creates quick and automatic reports which can help you track your Receivables, Payables, Income, and Expenses on demand.
Getting started is only the surface of running a business. What comes after it is harder. A good understanding of the numbers will help you better understand what’s happening in your business.
Are you struggling with your financials? Do be afraid of asking for help. Contact 3E Accounting today! 3E Accounting is a firm of experienced professionals providing expert Accounting Services in the Philippines. Consult your issues with professionals. Help conquer obstacles in your startups today.