Founded by a former IRS Agent

Founded by a former IRS Agent

New to Business? Follow these Bookkeeping Tips

May 1, 2015

New to Business? Follow these Bookkeeping Tips

When you’re just starting your own business, accounting and bookkeeping may not be your strongest suit. It takes practice to build an effective and accurate bookkeeping system. Here are some tips on how to build a bookkeeping system that works for you and keeps you on the path to growth.

Take Notes

Any time you spend money on your business, be sure to save the receipts. Your tax accountant may be able to find a category of tax write-offs that you were unaware of. Even if the expense is minor, keep the record– these small returns can add up over the lifespan of the average business.

Be Mindful Of Cash Flow

What you accrue on paper and what you actually receive in your bank account can vary greatly, based on how diligent you are about collecting money you’re owed. Sit down with an experienced person and put an accounts receivable plan in action. This may include following up with past-due clients by phone or written notice on a regular timetable.

Plan For Things To Go Wrong

When starting your business, one of the worst things that you can do is plan just enough budget to get you through. Sometimes there are major, unanticipated expenses that can put you in hot water. When considering how much to take out in loans or how much you can afford to spend, be sure to set aside some extra cash for those what-ifs.

Watch Your Accounts Carefully

No matter what type of bookkeeping software you use, it’s important to look closely at your accounts to make sure that money is being recorded in the right place. This is helpful for a number of reasons. First, it ensures that your bookkeeping is in good order if you happen to get audited down the road. Second, you ensure that you don’t pay taxes on money that you didn’t actually earn. For instance, if you have to deposit money from your personal funds or a loan source into your business account, this money may be counted as income unless you mark it correctly as a deposit.

Plan Your Taxes Carefully

One mistake that many beginners make is not planning for the expense of taxes properly. Preparing your taxes and paying them can come as a shock to your business unless you factor these expenses into your budget. Regularly sit down to estimate how much your tax liability will be, and set money aside to cover these costs.

Conclusion

Business has become much more transparent for those just starting out, and there are many new tools for managing your finances. If you are taking bookkeeping into your own hands, following the tips above can give you a leg up on staying organized and making sure that your taxes are correct. Besides, as your business grows, you will be thankful that you got organized right away; having a system in place from the start gives you the freedom to grow your business without worrying about returning to sort out your books.

It’s time to schedule an appointment with Pogosian Nazaryan & Company.