Starting a small business is a dream that many people share. Today, as the world is more connected than ever before, business owners are able to start their businesses from home. Whenever you are going to start a small business from home, it is important that you have good accounting and financial management practices in place. There are several accounting basics to understand in particular when you are going to start your in-home business.
Establish Business Structure
When you are going to start a small business, one of the most important factors to consider is how you are going to establish your business structure. Small businesses can choose to form as a sole proprietorship, an LLC, or in various other business forms. This is an important decision as it will continue to impact your business for years to come. It also can have an impact on how your organization is taxed and what accounting and financial reporting expectations you will have.
Choosing the Right Accounting Program
As a small business owner, keeping track of your finances is very important. A great way that you can ensure that you are knowledgeable about the financial status of your business is by utilizing a quality accounting program. Accounting software today can link to your bank accounts, revenue recognition programs, and other software to manage your finances.
This will allow you to produce income statements at the end of each month, current balance sheets, and other data that will help to ensure that you have a firm understanding of your finances. This can also help to ensure you remain in compliance with any financial reporting obligations, which could be set by investors or lenders.
Keep Receipts
Any small business today needs to make sure that they are keeping proper records for all of their revenue and expenses. You will want to keep records of revenue as it can help ensure you are recognizing revenue the right way and have a firm understanding of your accounts receivable status. You will also want to keep records related to your expenses as you will be able to use them to validate costs that you had throughout the year. This can come to be helpful when it comes time to file your taxes.
Tax Filing
A very important day of the year for any business will come when they need to file their taxes. Similar to any individual, all businesses are required to submit an annual tax return. This tax return will determine how much additional tax liabilities that the company needs to pay out throughout the year.
Businesses should always make sure that they are doing all that they can to reduce their tax liability. This can be done by keeping proper records of expenses, taking advantage of tax deductions available to businesses, and staying informed with the current small business tax law. For many small businesses, hiring an outside accountant or other support can help ensure your taxes are filed properly.
Know When to Hire Help
An important decision that any small business owner will need to make will come when they decide that they need to hire help. For a small business, keeping expenses low is almost always a top priority. However, as growth happens, it can be difficult to manage the accounting side of the business while also growing revenue and serving clients.
Due to this, there will come a time in which hiring additional support can be helpful. This can include hiring accountants and bookkeepers that will be able to handle this side of the business. If you cannot commit to a full-time team member, you can also outsource these services to a third-party accounting firm.
Consider Hiring a Business Attorney
Hiring a business attorney can also be a good idea for any small business owner. Business attorneys today can continue to provide a lot of support and guidance that will be helpful when you are establishing your company. The attorney can help you by helping you determine how to structure your business and giving guidance on how to manage the accounting and tax side of the company.
This can help to keep you organized and also ensure that you are able to focus on other parts of your business. Business attorney Andrew Weisblatt has continued to provide the services that any business owner will need to better understand their account needs and options. This can help ensure your finances are properly organized and that you remain in compliance with all obligations.
