Sunday, 8 May 2016

Accounting Services (& Book Keeping) for Start-Ups and SME

In our previous blogs, we discussed about the various forms of Company Registration Services and their advantages. Those articles would help start Ups to make up their mind for type of Company Formation required for their venture.
But just starting a company is never the aim of an entrepreneur (obviously!!!!) and their ambition is to make it a success.
Whether we have a multi dollar MNC or a bootstrapped e-commerce venture, the basic principle remains the same viz,
1-    Increase Revenue
2-    Optimize Cost
3-    Focus on expansion (geographically or otherwise)
And the problem faced by founders, promoters and Top executives also remains the same, They lose the sight of above mentioned cardinal principle. It has been observed and ratified by various experts across globe is that founders/executives do not normally pay attention to plan budget and monitor them regularly leading to such issues.
Best habits are inculcated young and we very strongly advice our readers (who are entrepreneurs) to focus on their accounting and book-keeping right from Day 1 and keep an eye on the various parameters on monthly basis (if not weekly).
Some of the key parameters they should have an eye on are mentioned below:
1-    Revenue: Revenue is the ‘actual’ amount which hits your accounts. (Even if you are bitten by GMV bug, an eye on ‘actual’ revenue is an absolute must)
2-    Cost of Operations: This will include Salary, office Rent, Electricity, Admin cost etc etc.
3-    Cost of Marketing: You can consider including salary of marketing employees of you have dedicated marketing employees
4-    Account Receivable: A lot of ‘profitable’ businesses have gone bust just because their account receivable management was poor. Please remember that money which sits in your bank is ‘real’ money
5-    Cash in the account: If your bank account shows cash of less than 10 months(bare minimum) amount of cash equivalents of the amount you need to run the operations at same level, it is time to panic. So increase your revenue, optimize your cost or start looking for funds (And Pray Hard!!!)
Regular Accounting and Book Keeping helps registered company to ensure that no government compliances like Service Tax Returns, Service Tax Registrations , VAT Returns, VAT Registrations, TDS returns are complied with (and you need not worry from any googly from IT dept.). Another advantage of regular accounting and Book-keeping services is that helps to manage Tax more efficiently. Just to enumerate few points:
1-    TDS deducted by clients are accounted properly
2-    Service Tax Credit is utilized properly
3-    All the expenses are properly accounted (Petrol Bills to Mobile Bills to even your visit to nearest Hill Station could be booked as expense)
If your business registration is small in size (say a Revenue of less than 5 Lacs per month or Less than 300 Transactions per month), you can easily manage accounting and Book-keeping in-house. But beyond that it is strongly advisable to take a professional help. Such services come for as low an amount as 1,200/- per month.

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