Startup Accounting Essentials
Startup Accounting Essentials
Starting your own business can be quite intimidating, to say the least. With over 16 years of experience, Cortnie Grno was able to share tons of valuable tips and tricks on accounting essentials for new small business owners at our monthly Founders Night. Check it out below:
To get your business started, you must first decide what type of business structure would be the best fitting for your company. Some key points to consider when deciding this include management structure, corporate formalities, and tax flexibility. Talk to your tax accountant or business law attorney to get professional insight into formalities relating to your company. The more questions you ask, the better chance you have at opening a business that’s right for you.
Before any business gets started, there are a few accounting basics that need to be covered.
- The Articles of Organization will be filed to let the state know what type of company you are and how it will operate.
- Form SS-4 will be used to apply for an employer identification number needed for tax filing and reporting purposes for your company.
It’s recommended that these two very important documents are scanned and kept in a safe place where they can be easily accessed whenever need be. Be sure to keep a record of everything, including expenses, income, assets, and liabilities. Accounting software makes it easier to store this information securely, however, small businesses may find it more beneficial to use a spreadsheet. Lastly, do not forget about checks when setting up a bank account!
There are two ways that you can pay yourself as a business owner: taking a draw of the profits or setting yourself up on a salary. Your business structure will let you know how you should be paying yourself based on the IRS guidelines. Typically corporations are the only ones who will earn a salary. Again, make sure you talk to your tax accountant to find out what a reasonable amount is for you and your business.
Keeping Accurate Records
It’s extremely important to keep accurate and up-to-date records to let you know where your money is as a business owner. This will not only let you know if you are making or losing money but why you are making or losing money. One mistake that many business owners make is waiting until the end of the year to give their accountant a box of receipts to do their taxes, which doesn’t allow them to know where they stand throughout the year and can be detrimental to the business. Many owners will “think” they know where they are, but keeping accurate records will help you identify month after month what can be managed to increase profits. Get familiar with your financial statements!
Overall, talk to your tax accountant or bookkeeper throughout the year to make sure you know exactly where your business stands, if you’re making money or not, and to better prepare you for tax season. Professional services are there to help you run your business more confidently.
Feel free to reach out to Cortnie Grno at Cortnie@MaiSolutionsNow.com for additional training services or with any questions you may have. Check out the full Founders Night Accounting Essentials presentation on our Facebook!