If you’re a San Antonio startup, one of the realities of getting up and going is that you need to have quality accounting systems in place. Here’s a guest post from Shelly Davenport, founder of By All Accounts, a degreed accountant with years of corporate & small business accounting experience. Shelly’s mission is to empower entrepreneurs through accurate, timely, and personalized financial reporting.

Accounting Tip #1:  Keep It Simple

Most new businesses have no reason to incorporate. Keep your accounting and taxes simpler by staying un-incorporated. Incorporation means annual corporate tax returns and quarterly payroll tax returns. That is too much paperwork and an unnecessary added expense.

If you’re worried about legal liability, then form an LLC (Limited Liability Company). You get the same protection as a corporation but no messy corporate tax returns and possibly no payroll tax returns. If you’re a single-member LLC, you’ll enjoy the tax benefits of a sole proprietorship.

Accounting Tip #2: Hire an Accounting Pro

Unless you are a lover of all things financial, “doing the books” is one of those things that always gets put off. Do you really want to spend your weekend reconciling bank statements? It’s best to hire a bookkeeper or accountant to help set up your accounting system. They will help you start off with a good record keeping system and will also be able to produce invaluable financial statements. 

If your business doesn’t necessitate a full-time bookkeeper or accountant, consider outsourcing. A virtual bookkeeper will save you time and money so you are free to focus on generating revenue and growing your business.

Accounting Tip #3: Separate Business & Personal

It’s a bad idea to mix your personal and business banking. Take the time to open a separate checking account for your business. This helps to avoid missing business tax deductions and inappropriately counting personal expenditures as business expenses. The division will also aid in more accurate financial reporting.

Accounting Tip #4: Be Familiar with Your Responsibilities

Let’s face it, we all like to avoid confrontations with the IRS and State Comptroller. Their fines and penalties are less than trivial.  It is important to be familiar with your filing requirements and tax responsibilities. Not only are timely payments necessary, but sales tax and employment tax require adequate records and accurate calculations to keep you out of trouble.

Accounting Tip #5: Strategize!

Take advantage of tax savings strategies when you can. For example, medical expenses are not fully deductible on your tax return. However, if you set up a MERP (Medical Expense Reimbursement Plan), you will be able to deduct 100% of the medical expenses for you and your family.

Accounting Tip #6: Let’s Get to the Bottom Line

Focusing solely on sales is very dangerous. Sales may or may not result in cash flow, and cash is what you need to survive. Turn your focus to gross margin- which is gross income divided by net sales, expressed as a percentage. Gross margin lets you know the percentage of profit you make after covering the direct costs of whatever you are selling and is the most important number for a new business.

Contact information:

By All Accounts
20079 Stone Oak Parkway
Suite 1105-111
San Antonio, TX 78258
210-913-4618

 


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