Top 5 Accounting Challenges for Startups and How to Overcome Them

Introduction 

Business is very similar to getting on a fast roller coaster, exciting yet full of unexpected bends. An accounting problem is among the definite yet ignored by most startups. The people who start the company are usually multitasking, and they undertake the financial work with no expert knowledge. This approach may bring unanticipated severe consequences.

Here at Accelero Corporation, we've managed to support many new companies and small businesses in systematizing their financial activities and meeting regulatory requirements, especially when they have to comply with international tax such as bolded keywords. 

Today, we will discuss the five most prominent problems in the accounting area of newly formed businesses, and I will share some tips on how you can defeat them easily.

1. Mixing Personal and Business Finances

There is no doubt that mixing personal and business finances is a mistake that a large majority of entrepreneurs make, despite being aware of the dangers associated with it. Even if it's something you are not aware of or it seems innocent to you in the beginning, it may cause major problems later during the tax season, especially if you try to raise money or get your finances audited.

How to fix it: Get a separate bank account for your business and open it the day you start. Try very hard to use accounting software for bookkeeping that not only ensures the separation of expenses but also gives you a very clear understanding through a very regular but not cluttered flow of information.

2. Poor Cash Flow Management

The smooth flow of cash is the survival blood of a new business. Even if your company is financially profitable, the negative cash flow can have such implications as inability to pay bills on time, lost business opportunities, and even closing up shop.

How to fix it: Utilize forecasting resources to foresee future cash flow requirements. Make certain that you send out invoices to your customers promptly and record your payables and receivables accurately. Look into professional services, such as those provided by Accelero Corporation, as an option to keep everything under control.

3. Complex Tax Requirements

The taxation process can get quite scary for some people, especially when it is related to new businesses that have shareholders or customers in a foreign country. In a case where you are managing your business from India and arranging deals with U.S. clients, the tax process may become more challenging than you expect, and this is something you need to be prepared for.

It doesn't matter if you owe federal income tax, or GST, or are eligible to get tax refunds; not doing your job on time in another country can be very expensive for your startup. It is not just the fines that you will be charged with, but your business may be in the red or might even have to close as a result of the mistakes you made.

How to fix it: You should visit tax professionals in advance and ask for their advice. For instance, in cases when the business is carried out by people who are mainly from out of India, such as NRIs, green card holders, or ex-pats, Accelero Corporation's accounting for USA Tax Filer in India Green Card Holders, a service for NRIs, Green Card Holders, and ex-pats, will be a great help to enable the busy entrepreneur to be free from the task. Also, the entrepreneur is 100% law-abiding. 

The word in bold is well looked after by their staff so that there are no issues of my creation or misunderstandings from any of the involved parties.

4. Lack of Accounting Knowledge

Many entrepreneurs are not experts in accounting, and that’s completely fine. However, the lack of understanding of the fundamentals of bookkeeping, tax, and financial reporting is what can put you in an unpleasant situation because you might not see the important things clearly when the time for decision-making comes.

How to fix it: Upskill yourself. Study the basics or pay an accounting expert. When you give the right people, such as Accelero Corporation, your accounting work, you can have time to develop and grow your business and have your books well-maintained at the same time.

5. Failing to Plan for Growth

During the initial phase, numerous start-ups exclusively devoted their time to staying afloat. However, the scenario can significantly change when your business experiences rapid growth from ‘small time’ to ‘big time’ in one go. After that transformation, your elementary accounting system might become obsolete. Now you require payroll, inventory management, and financial projections, and maybe you also have to deal with foreign income and tax treaties.

How to fix it: Make sure your accounting systems are fit not only for now but also for the future. Use cloud-based tools and software that can be easily changed in line with the growth of your business. Also, have a look at the long run and be a part of a company that is not only familiar with the Indian tax laws but also the American ones, mainly because with the brand making plans to go international, you will need this.

Final Thoughts

Being an entrepreneur is tough enough already, so don’t spend your precious time doing accounting. Once you figure out the problems and solve them in time, you are not just following the law, but also literally creating your way of expanding.

No matter if you are just a small company in your local area or a person from the United States who is currently managing his or her company with a base in India, Accelero Corporation brings you personalized tax and accounting services, which enable the startup to be financially healthy and prepare it for an audit. The know-how of the keywords highlighted in the text also means the completion of the income tax operation is beneficiary, thus, you can use your resources more effectively, developing your business.