If you’re getting ready to launch your business there is a congratulations in store for you! It takes a lot of dedication, hard work and perseverance to get to where you are today. However, as you probably already know, running a business is no easy feat – there will be hurdles to jump, milestones to reach and an ever-expanding to-do list! With that in mind, you’ll need to ensure you have a financial plan in place to set your business up for financial success. To get started, Randall Dang has nine business accounting tips to give you the foundation you need to operate a financially sound business.
Once you have registered your business, you will need an account to hold your business income. While you could possibly throw the money into your personal account, it’ll be a nightmare to deal with later on, so it’s not the best tactic. The reason why you’ll need a separate business account is for tax purposes because it’ll make it easier during tax season and some businesses (LLCs, partnerships, corporations, etc.) are legally required to have separate accounts.
Since you’ll have a separate business account, it’ll be much easier to track and record your business expenses effectively. Building financial statements, tracking deductible expenses and preparing your tax returns will allow you to monitor the growth and health of your business when it comes time to file your tax return. Ensure you establish a system to organize receipts and other important records!
Bookkeeping takes expense monitoring to another level and you should establish a working system to understand exactly how your business is performing. It’s the process of day-to-day recording of transactions, categorizing them and then reconciling bank statements. DIY software and accountants like Randall Dang can perform bookkeeping duties, so there are solutions out there that can fit your needs.
While your startup may only consist of you at first, you may need to hire employees as you grow and for this reason, you’ll need to set up a payroll system from the get-go. Whether you hire someone as a freelancer, contractor or full-time employee, it’s important to establish a payroll system that’ll have a payroll schedule and to ensure you are withhold the correct amount of taxes.
As a new business owner, you will need to research and investigate taxes to learn about the rules that will apply to your business. For instance, if your product/service required materials that are imported from other countries, it may be subjected to taxes and duties, which means you need to understand the fees associated with those incoming goods.
In order to get paid for your services/products, you need to figure out your payment methods. If you’re running a website, consider setting up credit card payments through your online store. If you have a brick and mortar store, you should look into payment processing systems like POS terminals, registers, etc. It’s important to accept a wide variety of payment methods to ensure you are providing your customers with an assortment of acceptable ways to pay.
Customers are used to paying sales tax and that should be no different with your business. You’ll need to start collecting sales tax immediately and it’s vital to track and record how much is generated. Be sure to research the laws regarding sales tax for local customers as well as international ones.
Depending on the structure of your business, you will need to research your specific tax obligations and abide by them. For instance, if your business is an LLC, partnership or proprietorship, you’ll be able to claim your business income on your personal tax return. However, if your considered a corporation, you’ll have separate tax entities and different employment tax status.
Last but not least, it’s important to always re-evaluate your methods to reassess the amount of money your business is spending while it grows. Keeping up with your finances and bookkeeping will help you stay on top of everything going on within your business!