Starting a small business is something that many people dream about. The problem is that many of these new business owners do not consider the small business accounting that needs to be done. There are some small business accounting steps that you need to know about and complete to ensure that your business starts on the right financial foot.
Have A Separate Bank Account
When you start any business, you should think about having a separate bank account. A separate bank account helps to keep your business money separate from your personal funds. It will also make life much easier when it comes to business taxes. It is important to note that if you set up your small business as an LLC, partnership or corporation, you legally have to have a separate bank account. Sole proprietors do not have to have a separate account by law, but it is recommended.
Before you open a separate account, you need to do some research. Different banks will have different business accounts on offer and have different fees. Most business checking accounts have higher fees when compared to personal accounts and you need to keep this in mind. You should also find out what you require to open the business account.
Keep Track Of Your Expenses
The foundation of good small business accounting is good recordkeeping. Knowing what your expenses are is important and will help you determine if your business is working properly and could expand in the future. Having a full understanding of your expenses will also help you identify tax deductible expenses which save your business money in terms of taxes.
When you start your business, you need to have a system in place for keeping and organizing receipts and expense records. There are certain types of receipts that you need to pay special attention to. These will include meals, out of town business travel, vehicle expenses, the receipt of gifts and office expenses.
Have A Bookkeeping System
When you first start your business, you might not have the capital for hiring a bookkeeper. If you are unable to hire a bookkeeper, you need to set up a bookkeeping system. Bookkeeping is the process of recording your daily transactions and reconciling your bank statements and other payment accounts. It is important to note that it is recommended that you hire a part-time bookkeeper to help you when you start your business.