When Should a Startup Hire a Virtual Accountant?

Starting a venture can be so exciting but often can become one of the most challenging aspects of running a startup. From trying to find new customers, managing your operations and employees and planning your growth.

Many founders will often run their own accounts or use spreadsheets to track their income and expenditure. As your business grows, your finances can become more complex.

When Should you get a Virtual Accountant?

When your time begins to be taken up with managing your finances or when you want expert advice on your finances.

Let’s look at the signs you should consider using virtual accounting for your startup.

1. When you begin to see an increase in financial transactions.

At the start of your startup you maybe only have a few invoices, expenses and payments from customers. However, as your business grows you will begin to see more transactions.

You may start to see:

• Multiple invoices from customers & payments to vendors.
• Salaries to employees & operational expenses.
• GST Calculations & returns.
• Bank Reconciliation
• Keeping track of your income & expenditure each month.

All of this can lead to errors if done manually.

Using a Virtual Accountant will help you keep everything in order. They can help you keep track of your transactions and ensure your accounts are kept up-to-date. Without needing a full-Time Accountant in the office.

Pro Tip: Don’t leave your finances getting too confusing. By keeping on top of your bookkeeping it will make it easier to see how your business is performing.

2. When hiring a full-Time Accountant is expensive.

Startups generally have a small budget. If you are considering hiring a full-Time Accountant you may need to factor in additional costs such as employee benefits, software, training etc.

If you don’t require too many accounting services then it might be a good idea to outsource.

By using a Virtual Accountant you can ensure your startup gets professional support whilst keeping your costs down.

3. When you have difficulty with GST and Taxes.

Taxes are an important factor to consider.

As your business grows you may need to manage GST registrations, GST returns, TDS compliance, Income Tax records and other relevant taxes.

If you miss any deadlines or have inaccurate financial records you can cause yourself unnecessary issues.

A Virtual Accountant can help by:

• Organising your GST documentation.
• Keeping track of your tax payment deadlines.
• Keeping track of your purchases & sales.
• Reconciling your transactions.
• Preparing accounting information for taxes.
• Working with tax professionals where needed.

However, your requirements will depend on your business structure, turnover and the relevant taxes.

4. When you cannot see your true profit.

Just because you are making sales doesn’t mean you are making a profit.

For example, you may be making a monthly turnover of ₹5 lakh. However, after accounting for salaries, rent, marketing, software subscriptions and other expenses your real profit may be much less.

Without having proper financial reports you won’t know where your money is going.

Having a professional accountant can help produce reports such as:

• Profit & Loss Statements
• Cashflow Statements
• Balance Sheets
• Expense Reports
• Accounts Receivable & Payable Reports.

This helps founders understand their financial position and make informed decisions.

5. When you are preparing to seek funding or grow your business.

Are you looking to seek investment, apply for business loans or grow your business?

You will need accurate financial records.

Investors and lenders will likely ask for financial statements, turnover, expenses, cashflow and other supporting documents.

Having an organised accounting system will help you provide accurate information. You’ll also understand how much funding you really need.

Working with professional Accounting Companies In Chennai can be beneficial.

6. When you need improved financial technology.

Accounting has moved on from handwritten ledgers and spreadsheets.

With cloud accounting systems, electronic invoicing, automatic bank reconcilliation and online document sharing it’s easier to manage your accounting remotely.

A Virtual Accountant can work with the correct accounting software to keep your records in order. They can also share reports and work with business owners remotely.

Always check to see if they adhere to correct data security, access and sharing processes.

When Should I Hire a Virtual Accountant?

Use this simple checklist to see when you should consider using one.

The sooner you put in place a reliable accounting process the easier it will be to manage your finances as your business grows.