Fincance management for startup companies

Lean costs and reduced structure are among the characteristics of a startup, but that does not mean that they do not need to have constant and exact control over the movement of their finances. For this type of company, accountancy or financial management is as important as any other.

Despite the fact that the company is starting up but the importance of accounting can still be seen in the search for investors and in the relationship with them, which has to be based on transparency and exact numbers for the necessary measurements.

Maintaining Transparent Financial Management for Investors

After an investor decides to invest money in a startup – seeing his pitch presentation, for example – the partnership may still not move forward for several reasons. One is the inconsistency of accounting documents.

If the bookkeeping of a business does not clearly and safely reflect the good results placed by the person in charge in the presentation, the potential investor can quickly give up the investment because they feel insecure about the situation.

In this case, this reason causes a loss of investment. Remember investors do not like entrepreneurs who do not know their numbers and do not invest in companies without transparent and accurate figures.

Cost Control for Scalability

The nature of the structure and the lean costs of a startup helps in the growth and scalability of operations.

Not being able to count on reliable accounting reports and updated in real-time, it becomes easier for additional expenses to go unnoticed or for them to evolve without due care.

The consequence of this is the difficulty of scaling the startup by the existing cash that reduces the profit margin and removes availability from other areas, such as marketing and improvement of products or services.

Correct Maintenance of Values ​​and Records

Small companies, whether they are startups or not, often have their values expenses, revenues, assets, and liabilities – mixed with those of the individual owner or partners.

This disorganization can end up with individual expenses made with company money, a lack of correct perception of the achieved income, or another misuse of resources.

Therefore, it is essential to keep the accounts up to date and accurate so that there is a care with the values ​​of legal entity and control over receipts and payments of obligations.

Good Choice of Tax Regime

In this sense, the importance of accounting for startups is in accounting advice, as the professional who provides this service is the one who best indicates to a business in which tax regime to fit.

In addition to helping with the correct attachment framework, an accounting firm can also find legal ways for the startup to pay its taxes for the lighter rates when more than one attachment appears to be related to operations.

Before that, to understand which of the two attachments the startup will be in, it is necessary to relate the revenue to the payroll to have the result of Factor R, a legal criterion that defines the framework. In addition, depending on the billing, it is still necessary to carry out tax planning to simulate specific legal situations and possibilities in order to also analyze the other regimes to define one safely.

Maintaining Angel Investor Relations

There are several other rules that those involved in an investment relationship need to follow if the business is opting for Simples. Therefore, accounting advice has its importance extended to such cases when the company looks for investments for accelerated growth.

Management Accounting Exercise

The concept of managerial accounting is to extract segmented and personalized bookkeeping information for use in business management, accounting reports being tools for decision making and agents to aid growth.

However, before management accounting comes to the accounting of the company itself, which is the source of resources for an administration based on reliable, accurate, and updated data in real-time.

Legal Certainty for Actions and Decisions

In this text, we have already mentioned situations such as receiving investment and choosing a tax regime, but there are several others that require decision-making by managers, such as hiring interns and staff and outsourcing activities. And the decisions made need legal certainty so that they do not create problems.

Therefore, decision-makers and actions need to have reliable information on hand to make them and expert advice to observe laws and procedures. This prevents prosecutions against the business, fines by public agencies, and other types of problems that generate inconvenience, additional work, and financial losses, and even the brand image in the future.

Use of Tax Benefits

There are several federal, state, and municipal tax benefits and incentives that startups not opting for Simples Nacional can take advantage of to reduce their tax burden. And to take advantage of them, the company must be advised in relation to the legislation of the programs and rights and duties resulting from adherence to them.

Although the startup is part of Simples, it is important to pay attention to these possibilities, as an accounting, financial and legal review can clarify that it makes sense to leave the simplified regime for the counterparts that can be obtained with tax benefits.

Correct Valuation Calculation

In this regard, the importance of accounting for startups lies in the fact that the valuation has to be calculated based on legal accounting and/or financial statements. Therefore, the use of bookkeeping with quality and accurate information is inherent in determining the value of the business.

Most of the time the method used for the calculation is the discounted cash flow, which takes into account the generation of cash by revenues and expenses and the discount made based on depreciation, cost of capital, and opportunity cost.

The financial automation may eliminate manual tasks related to accounts payable and receivable and the management analyzes. For this, the implementation of differentiated workflows and software integrates activities, excludes unnecessary steps from administrative routines, and covers all Backoffice data to provide responsible professionals with personalized reports.

Conclusion

Advisory and accounting processes increasingly have strategic and operational importance within companies, and can really help them to grow and making a financial and qualitative difference in the way we show in this post.

As both are constantly evolving, walking alongside innovations, professionals, and working methods can adapt to the dynamism of startups and the degree of technology and automation that they apply daily in the routines of their sectors.

Now that you know why the importance of accounting for startups cannot be overlooked, understand how in practice an accounting office can help your business to be more scalable.

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