If you’ve recently made the decision to create a startup company, congratulations! It’s an exciting time to nurture the foundation of the business and see how it grows over the next few years. Oftentimes as the head of the company, you already wear many hats, which makes it easy to overlook some important accounting steps.
But not to worry! The experts at Ferguson, Timar & Company have compiled the following simple accounting tips to help your small business get started on the right foot.
1. Track All Business Expenses.
Save all receipts and establish some sort of tracking system for your business expenses. Some of the most common expenses include travel, mileage, meals, entertainment, office supplies, rent, utilities, software and customer gifts.
2. Start a Business Bank Account.
Partnerships, LLCs and corporations are required to have separate bank accounts for business. Sole proprietors and DBAs don’t need one legally, but it is highly recommended. A business bank account helps keep financial records more organized. You can set aside money for expenses and estimated tax payments, as well.
3. Establish a Bookkeeping System.
Bookkeeping is a daily process of tracking transactions, expenses, income and payroll. You can do it yourself with various software programs. Or, you can outsource your bookkeeping and CFO services to a CPA firm like Ferguson, Timar & Company. These types of firms take care of everything for you, so you can focus on what’s important: growing your business.
4. Organize Your Payroll Process.
If you have employees or independent contractors you work with, then you’ll want to establish your payroll system. Issues like payroll dates, tax withholdings and W-2/1099 forms should be studied and worked out as soon as possible. Whether you have any employees or not, you also need to determine how you will pay yourself.
5. How Will You Receive Money from Customers?
It is important to figure out how your customers can pay you for your products and/or services. Will you accept credit cards? Should you use a third-party payment processor like PayPal or Shopify? In addition, you’ll want to make sure and understand any state sales tax obligations and procedures that apply to your business sales. Do your research and get all your customer payment systems in place.
6. Understand Tax Obligations.
From sales tax to business income taxes to expense deductions, having your own business brings a lot of different elements into play when it comes to filing your state and federal taxes. Make sure you understand all your tax obligations.
7. Revisit Your Systems Regularly.
What you establish as an accounting system early on may not work as well when your business starts to grow. Perhaps there are more efficient ways of doing things or more factors that need to be considered in your bookkeeping. Regularly re-evaluate your accounting systems and make improvements/adjustments as needed.
We hope you find these startup business accounting tips helpful. If you have any questions, want to outsource your bookkeeping/CFO services or need small business tax advice, contact Ferguson, Timar & Company today.