As a startup business, your accounting process is incredibly important. Not only do you want to write off everything that you are legally allowed to write off – to save money – but you also want to make sure that you are filing your taxes correctly. As a small startup, one audit could cause your business to go south before it even has time to become successful. So, not only is it important to have a good accountant, but you also want to pay close attention to your books. Small business accounting is all about making sure your books are in order – if they aren’t, you could be dealing with some serious problems with disorganization. Here is some basic accounting advice for startup businesses.
- Make sure that you spend money on only things that matter. As a startup, you only have so much capital to work with. Even if you have a loan, your capital may be spread even more thinly. So, you want to make every cent count. You also don’t want to spend capital on extraneous items. So, be sure to make a list. If you see that you are going overboard, you can curb accordingly.
- Make sure that have a spreadsheet for all your spending, cash flow, and loans. It is important to have separate spreadsheets that you can look at to make sure you are keeping all of your capital in order. Not only will keeping a spreadsheet make you more organized, it will also allow your business to break down the necessary categories when it comes time to file your annual or quarterly tax return. If this information isn’t organized, it will be a nightmare to organize everything when tax time comes around.
- Make sure that you save every single receipt and invoice. It is also critical that you save every receipt, because a receipt will be a proof of purchase. Not only is this important for the sake of credit card purchases, but also cash purchases, which are harder to track. When you write off cash purchases, these receipts may be your back up in case of an audit. Not only do you want to hold on to receipts, but also invoices too – anything proving certain financial transactions.
- Make sure that you hire a good accountant. Investing in an accounting firm – like SDA CPA Group, P.C. – is incredibly important. As a startup business, you don’t want there to be any confusion when it comes to your tax return. Also, you may not know exactly what you can and can’t write off. By doing your own taxes, you may miss something important that could either cost you money or cause an expensive penalty to be incurred.
- Make sure that you remain transparent. The more secretive you are with your books, the more suspicious the IRS will get. The last thing you want is suspicion, because it may result in an audit. So, be sure not to hide any expenses or purchases. In the end, the more accurate you are when it comes to your accounting and reporting, the better off your small business will be.