Rather than starting off your business with multiple people, it is always recommendable to start it solely. In other words, you must try inducing your business as sole proprietor. By doing this, you won’t have to make payments to any of your employees from day zero of your business and as a result there would be lesser accounting burden on your shoulders, thereby enabling you to focus more on your competencies.
Tangled up with accounting aggravations…??!! Finding it difficult to balance your core business along with back office operations.
It happens to almost all small businesses when it comes to managing accounting activities.
How about handful of tips on Accounting for small businesses:
If you kick start your small business as a sole proprietor you get an advantage of exemption from state tax collections. You only probably need to apply for an occupational license which is mandatory to set up a business. Doesn’t that sound quite beneficial…??!!
You can go ahead for buying personal liability under umbrella policy. This will reduce your accounting as your liabilities will also be on a lower end. You can become more efficient at it by knowing your trade fairly well and keeping it precise.
In case, you begin your business as a sole proprietor you must solely concentrate on structuring up your business instead of making the IRS know about yourself. They anyways won’t come to know about your existence before you file for your first tax returns. This will make your accounting smoother and less complicated.
Many a times it has been observed that businesses transfer ownership within first few years of operation. While doing this there arise many legal formalities and documents which need to be filed, but if you are a sole proprietor you need not go through all the procedures like taxes to get your investment return; also no high accounting fees to close out your entity.
Above points can be taken into consideration if you commence your business in a sole proprietorship form. What if you start it the conventional way? Here are some useful points for easy counting in that case:
Always try having distinct folders for your accounts receivables / accounts payables and funds that have been borrowed. This will simplify your accounting calculations and let you easily identify different accounts as well as it will facilitate to retrieve information about particulars at a go.
Small businesses tend to commit the mistake of taking daily expenses as petty expenditures. But that is not true. One must record the day to day expenses as they too comprise a good half the main budget. These incidentals should also be recorded to chart out a short-term budget for upcoming weeks or months.
It is easier to calculate incomes than expenditure!! So, you must set a monthly target of income which should be achieved for surviving and compensating the expenditures. Ignoring this, a business may get affected adversely and may even suffer mighty losses.
Calculating overheads regarding wages, benefits and incentives of your labor army is definitely a good idea. This will help you track down the costs that you incur on human resource. It will even make possible for you to analyze whether you are crossing your budgets or not.
Always try to get the balance payments from your clients on time. Letting your clients go without paying the balance amount is a big no-no. You have rendered services/products and the money in return must get reflected in your books. You might think that balances generally are small amounts but they do make a huge difference in the long-run or coming years.
