If you’re getting your own company off the ground, doing your accounting right from the start is an essential but often-overlooked aspect. Keeping the books in order ensures you’re tax compliant and keeping track of your income and expenses properly. Check out the helpful tips below to keep your accounting on track as your new company starts.
And if you are looking for a good accountant, it’s wise to find one with their CMA designation, which shows they have advanced accounting skills and experience.
Know The Law
The first thing to do to manage your business finances is to understand the laws that apply to your company. You’ll never learn how to be a good bookkeeper unless you know why those skills are so vital.
You should understand things such as:
- When do I need to file taxes?
- What information do I need to record expenses and revenue?
- How long should I keep copies of invoices?
You’re better off being prepared from the start than panicking during tax season.
Separate Personal and Business Expenses
It’s essential to separate your business and personal life, and it’s just as necessary to keep your personal and business expenses that way, too. It’s hard to manage your company’s cash flow if your personal expenses are in the mix. Open a business bank account for your company right away.
Watch Your Expenses Carefully
One of the most common problems with startups is watching expenses. Small expenses like lunches for your team and office supplies can become big ones if you don’t keep an eye on them.
You can’t run your household correctly if you don’t track expenses, and it’s the same thing with your business.
A good idea is to have a business credit card to pay business expenses and connect it to accounting software. This avoids having a wallet full of receipts to input by hand. Having your business expenses recorded automatically means you won’t be scrambling to find receipts during tax season.
Try Cloud-Based Accounting Software
Managing your accounting isn’t every business owner’s specialty. So if you don’t like crunching numbers, consider purchasing cloud-based accounting software.
There are many great options for sale, but software such as cloud-hosted QuickBooks is a great choice. You can access your books anywhere, anytime, collaborate with workers, and it has excellent data security. And your financial data is always automatically backed up.
Track Salaries Accurately
It’s estimated that employee salaries cost about 70% of your annual budget. Many people work overtime and over holidays to meet vital deadlines in a new company. So you must pay them correctly.
If you track extra time and time off by hand, you can lose control. The accounting software you buy should track the salary and hours of each worker by connecting it to an attendance system. Your bookkeeper also can calculate payroll taxes because they differ from income taxes.
Manage Your Inventory Records Properly
Theft in the United States accounts for $50 billion in losses annually. They can throw your accounting out of whack if you aren’t observant. You can avoid this problem by tracking buying and selling dates, stock numbers, and prices.
If you need to manage a lot of inventory, consider automating this task with inventory management software. Or your accounting software may be able to handle it.
Starting your own business is exciting, but things can get choppy if you don’t manage your books well. Follow these tips, and you’re sure to have an easy time tracking the financials for your startup!