(This post first appeared on Quora Germany).

The most important decision to be made in connection with finances when setting up a small business is the organisation of the financial area. In other words, find a good tax advisor who will support you from the beginning and stand by your side. But be careful not to use external advice as a sparring partner, as this can quickly become expensive.

It is important to clarify which obligations exist vis-à-vis tax offices and other authorities. In the best case, quarterly accounting is sufficient, which again saves costs.

You have already decided on a bank account when you set up your business. Make sure you have online banking access. It is even more important to check your bank account every day. Without cash in the account, your small business will not work.

Knowledge of finance (and accounting)

Accounting guarantees the proper presentation of all (financial) transactions of a company. The word proper is important. Attention, right at the beginning collect, check and keep all contracts, invoices, receipts, etc. properly. The tax advisor is disciplining and helpful here. Use a cloud service provider such as box, dropbox, or google drive to store and share documents. If you receive and send more and more invoices, you can look into services such as Candis, Fastbill, etc.

Understanding the balance sheet

You can forget about the actual "balance sheet" at first. Firstly, it results from the financial movements up to the annual financial statement, and you have a good handle on this by now due to the orderly financial processing (see above). Secondly, your tax advisor will draw up the balance sheet and, thirdly, he will explain it to you. There should therefore be no surprises. By the way, the best way to understand or learn a balance sheet is by using your own example.

Making decisions

All decisions have financial implications, all of them. Now the question of the financial plan immediately arises in order to be able to assess the effects. There is no end to the philosophising on the subject of financial plans. I would like to suggest a different approach: cash flow plan.

Cash flow planning

Take your bank account, assign the receipts and payments to accounts. (You can get the account scheme from your tax advisor). And then consider what receipts/payments you expect in the next 1/3/6 months. Don't complicate things, just base it on your assumptions and knowledge. Costs are the easiest: rent, 500 p.m. - internet 150 p.m. - etc. This gives you a very good feeling of where your business is heading. And later it is the best basis for the financial plan. But that's another chapter.

Tomasz Tunguz, a VC, has said (loosely translated): "It is not the accuracy of the plan that is crucial, but the fact that there is a plan at all. Ultimately, it helps to understand the direction of the company, to make decisions and to set milestones.

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