TOP 5 TIPS FOR NEW ENTREPRENEURS

Starting a business can be an effective way to deal with an unstable economy. After all, entrepreneurs are their own bosses; they begin with at least one passionate employee (themselves) and an idea that fills a perceived market need.

A report by the Bureau of Labor Statistics suggested that over half of all businesses close in their first five years, and in most cases, mishandling funds or a monetary crisis is the reason for the failure of these companies. 

Usually, we get to see these financial crises because of a series of little bookkeeping errors mounting up over time, rather than incredibly low sales or deliberate framing. 

Most entrepreneurs aren’t trained accounting experts and most businesses can’t afford to hire an in-house accounting team, so the likelihood of mistakes occurring is inevitable. Below we have discussed a few comprehensive tips on accounting to keep your business thriving and shining for years.

Here are our top five accounting tips for entrepreneurs who have begun their business journey.

1) Business Banking

Be sure to open a business account as soon as you receive your legal business documents. Separating between business and private expenses can become time-consuming. Paying a bookkeeper to differentiate between your weekend getaway and business meetings may be costly.

In addition, there are several tax implications when running your business transactions through a personal bank account. Running a business using your personal bank account will cause issues in tax reporting. It may also lead to exposure of your personal assets in case you run into any legal difficulties. While creating your business account necessitates a bit of extra paperwork, such as a business license and articles of formation, it’s an important first step toward maintaining your company’s finances in good shape.

2) Tax Planning

Plan your taxes early and often, as soon as your start your new business. Be aware of industry standards for tax liabilities. Consult with your tax advisor to determine what deductions apply to your business. Take into account all aspects of your business, such as vehicles, real estate, employees, assets and loans.

If you choose to file your taxes as self-employed or Schedule-C, familiarize yourself with tax deadlines and required information. Prepare now by setting 30-35% of your income aside for the tax payments. Due to business tax regulations and guidelines in each state, research tax code with help from your CPA.  

3) Future Expenditures

As your business grows big, you may also expect your overhead, or operating expenditure, to hike up as well. To manage more people and devices, you should consider investing in improved technology, software, security, or increased inventory. 

If you have prior experience in business, maintaining positive cash flow will be manageable under most circumstances. However, as you pursue your vision and grow your enterprise, there may be unexpected variables which can drive expenses up quickly. Keep aside funds to prepare ahead for big investments or unexpected expenses. 

4) Expense Receipts

With or without an accountant, you can keep track of all receipts related to your business operations. Set aside time daily and record your receipts digitally using your phone or a digital scanner. The organization of receipts is highly beneficial to proper bookkeeping. This will help you in qualifying for more accurate tax deductions, saving money, and protecting you from legal difficulties. 

5) Select Appropriate Software 

Streamline your bookkeeping with modern cloud-based accounting software. Together with the help of an accountant, you will be able to determine the best fit for your business. If you are worried about increased overhead, become aware of low-cost options and deals to help you save. Familiarise yourself with different software and find what works best for your business.

For any entrepreneur, starting a new company venture is a journey towards a dream come true. Don’t let accounting efforts add to your stress. Meet with your accounting professional and ask about insights that can ease the strain. Even if you’ve never done any bookkeeping before, organization and attention to detail can help you maintain your company’s profitability.  These top tips for you as an entrepreneur can help you establish plans for your money with ease as you grow your business.