Bookkeeping and accounting tips for your small business
One of the most important parts of getting your small business started, and making sure it runs successfully, is keeping track of the books and finances. Many a small business has failed because of shoddy accounting. By keeping track of your numbers you will be able to increase your profits, obtain financing and make the right decisions. A plan for accounting needs to be followed from day one – not one year later when the IRS comes knocking on the door.
First, find a good online guide or textbook that will give you tips on what to keep track of. Second, organize your bookkeeping according to the information that the IRS will request from you. One method is to take a schedule C, which you will use to report business deductions and expenses to the IRS, and sort your expenses from there. Use those categories as your guiding principles. In addition, there are numerous accounting websites and softwares such as Quickbooks, that can help you get the upper hand right from the beginning.
Hiring an accountant
You will probably not have the money to do this initially, but that’s okay, it is better not to anyway. Every small business owner should understand the accounting and tax ramifications of his business, so not hiring an accountant will force you to learn the ins and outs of the accounting side of your business. Once you can afford an accountant, weigh the cost against your time and the risk that you will make an error. You can always take your books to an accountant for occasional review to make sure you are doing things correctly.
Some tax tips
- Owners of S Corporations do not have to pay Social Security or Medicare taxes on the part of their profits that are not considered salary. As long as you pay yourself a reasonable salary, other money you take out is not subject to those taxes.
- You should not neglect to deposit withholding taxes for your own salary or profits.
- Do not fail to keep track of and remit your employee’s withholding. You will be personally liable for them even if you are a corporation.
When starting your small business, do not take accounting likely, it is key to your survival and flourishing. There are many books, computer programs and accountants out there that you can consult to get your accounting in order. Be proactive, because the IRS will be and that’s the last kind of agent a small business owner wants to see knocking on their door.
 Petrus, Desiree and Warda, Mark, Start a Business in Pennsylvania 163-166 Sphinx Legal (2006) 4th edition