Setting Up Your Start-Up’s Accounting System

Creating an efficient accounting system is essential for tracking your start-up’s financial performance. Here’s a step-by-step guide to help you set up a robust accounting system from day one.

Steps to Set Up Your Accounting System

Choose an Accounting Method

Decide between cash basis and accrual basis accounting. Cash basis records transactions when cash changes hands, while accrual basis records them when they are earned or incurred.

Select Accounting Software

Choose a software that fits your business needs. Popular options include QuickBooks, Xero, and FreshBooks.

Create a Chart of Accounts

Set up a chart of accounts to categorize your transactions. This includes assets, liabilities, equity, revenue, and expenses.

Set Up Business Bank Accounts

Separate your personal and business finances by opening dedicated business bank accounts.

Establish a Record-Keeping System

Implement a system for storing receipts, invoices, and other financial documents, either digitally or physically.

Track Expenses and Income

Regularly record all business expenses and income to maintain accurate financial records.

Prepare Financial Statements

Generate key financial statements such as balance sheets, income statements, and cash flow statements to understand your financial position.