CommonCentsMom.com is advertiser-supported: we may earn compensation from the products and offers mentioned in this article. However, any expressed opinions are our own and aren't influenced by compensation. The contents of the CommonCentsMom.com website, such as text, graphics, images, and other material contained on this site (“Content”) are for informational purposes only. The Content is not intended to be a substitute for professional financial or legal advice. Always seek the advice of your Financial Advisor, CPA and Lawyer with any questions you may have regarding your situation. Never disregard professional advice or delay in seeking it because of something you have read on this website!
Sometimes, something you do on the side for a little extra money turns into something bigger, and before you know it you’ve got a whole business on your hands. It’s great, and you should be proud that you’ve managed to turn something small into something big. However, a business does come with extra responsibility, especially that of accounting. Accounting exists to make things easy and transparent, but unfortunately it does also create worry for business owners.
Here, we look at some beginner accountancy tips that could help you succeed.
Learn About Fixed Asset Accounting
It isn’t too complex but the majority of businesses in the USA will use some form of fixed asset accounting. In essence, it’s a tangible piece of equipment a business (company or firm) expects to use over time to help it generate income. They’re purchased for long term business use. Think about machiners, computers, etc. They come under the property, plant and equipment tag. As you’d imagine, there’s probably multiple fixed assets you’d need to account for. If you learn about fixed asset accounting and plan to do your own accounts you’ll know exactly what you can and can’t claim for, as well as your depreciation method etc. It might be that you need accounting software or an accountant to help you out, but in the first instance, it might be good to educate yourself on fixed asset accounting ahead of submitting your accounts.
Accountancy Software Can Help You Out
If you’re simply having to look at turnover less sales equals taxable profit, you may feel like software is a bit excessive. However, when you start needing to account for complex items like leases and fixed asset accounting it can get quite frustrating. That’s where specific software can help. It might be bespoke lease accounting software or maybe even something a little more open ended like quickbooks. If you can foresee your accountancy becoming more complex as time goes on you’d do best to start strong with accounting software.
Business Structure And Accounting: Choose The Right One
When you set up a business you need to make sure that you set up the right one. The type of business structure you choose will affect how you’re taxed and how much paperwork you need to file. Common options include sole proprietorships, partnerships, limited liability companies (LLCs), and corporations. Each structure has its own pros and cons, so it’s important to research and choose the one that’s best for your business. Just because it might require more accounting, it doesn’t mean you shouldn’t go for it. Again, if you’re not sure, speak to an accountant or business agent. You need to get it right at the start.
Create A Financial Plan
Creating a budget and financial plan for your business can help you manage cash flow and ensure that you have enough money to meet your financial obligations. It also helps in determining the most cost-effective approach, and identifying opportunities for growth. It might sound like overkill in the first instance but creating a financial plan can really help you know exactly where you are with your business. It can help you realize whether you’re in the right place to recruit someone or not, or move to a bigger premises etc. There are free templates online and they’ll probably be a lot quicker to create than you think. They’re also useful for those concerns financing or loan agreements with banks.
