If you're starting a new business of any kind, you want to get it set up the right way from the start. That will save you a lot of stress and worry when it comes tax time. Plus, when you stay on top of your financial status, you'll always know how well your business is growing and what kind of expenses you can afford. Starting a new business isn't easy because you have to take care of so many different things at once. Receipt keeping and accounting may be the least of your interests and concern. That's why hiring an accountant is such a good idea. You'll have guidance in keeping your business in good financial shape. Here are some good accounting practices you want to establish right away.
Save Your Receipts
If you're not an organized person, it may be difficult to start saving your receipts. However, your accountant will need them to prepare your taxes because they are required to calculate your deductions. You might have to pay more taxes than you need to if you can't prove your expenses. Start saving the recipes from the time you make your first business purchase. Your accountant may not offer bookkeeping services. If not, you can enter the receipts into bookkeeping software to create reports for your accountant. Just be sure to keep up with it and not put it off because your accountant may want to reconcile your financial status on a monthly or quarterly basis so you can see how you're doing financially.
Track Your Income
Tracking your income may get difficult if you send invoices and wait to get paid rather than being paid up front. These two ways of making income are tracked differently by your accountant and reported to the IRS in different ways. If you get paid at the time you sell the product or offer your service, you use the cash accounting method. If there is a delay, you record the amount you earned one month and then record the payment when it comes in the next month. This is the accrual method of accounting. Your accountant handles all this, but you need to track your invoices and payments so all the money that comes in and that is owed to you is accounted for at tax time.
Consult Your Accountant
If you're busy running your business, you might not have an exact idea of how profitable it is. You might know how much is coming in but if you pay expenses when they're needed and don't reconcile the two, you may not be making as much profit as you think you are. When you hire an accountant to handle your books and your taxes, be sure to consult with him or her a few times each year. At least quarterly is good since you'll be filing quarterly taxes. Your accountant will give you a very clear picture of the profitability of your company and whether it is growing or not. Your accountant may even be able to offer some financial advice when you are bringing in a lot of money and don't know what to do with it.
Even if the only thing you use your accountant for is preparing your taxes, it is money well spent. You want your taxes to be accurate and you want the most deductions so your quarterly payments are manageable. Hiring an accountant can keep on the good side of the IRS and that means one less thing to worry about as you're getting your new business off the ground. For more information, contact a local accountant, such as Teri J Henderson, CPA, P.A.Share