We often ask our clients what do you wish you would have known as you were starting that you know now? This month, Kanitha Matoury, owner of Spice Monkey, an Oakland-based, veteran-owned restaurant-market-bar told us: “Some people think that your accounting system comes later as you develop your business, but I recommend establishing it early. Good accounting practices enable you to make more informed choices as you work to get your business off the ground.”
We agree, and here are three reasons why a strong accounting system is imperative for your small business development.
It’s The Law
The IRS requires that businesses retain a set of records that can be audited. You’re required to track more than just your income. By keeping diligent records each month (each day, ideally), you are better prepared come tax time (or audit time).
It Can Help Your Business Grow
Tracking your expenses closely can help you make better spending decisions and save cash for where your business needs it most. For example, if you just track “inventory”, you may not realize that you’re spending more on specific inventory that’s not selling. By keeping account of each item, you can more strategically invest in areas that offer more opportunity for growth.
It Can Help You Prepare For A Loan (Or For Investors)
Whether you are currently operating a business or just planning to operate one, a strong accounting system can help you prepare financial projections and demonstrate the viability of your business idea to the people that you’d like to partner with you to help you start or grow. Nearly all lenders and investors require financials before considering financing.
For help reviewing your financials, identifying areas for opportunity in your business, or for accounting support, please contact the SBDC. We’re proud to host the SBDC and the incredible team of advisors that support small businesses.